The Pension Fund Regulatory and Development Authority (PFRDA), besides easing National Pension System (NPS) exit rules, has permitted subscribers, who join it after the age of 65 years, to allocate up to 50% of the funds in equity.
The Pfrda in a circular said that in response to the large number of requests from the existing subscribers to remain invested in NPS beyond 60 years or beyond their superannuation, and the desire from citizens above 65 years to open NPS, it has been decided to increase the entry age of NPS in the interest of subscribers and benefit them with the opportunity of creating a long term sustainable pension wealth. “The existing age of entry which is 18-65 years has been revised to 18-70 years,” PFRDA said.
“Any Indian Citizen, resident or non-resident and Overseas Citizen of India (OCI) between the age of 65-70 years can join NPS and continue or defer their NPS Account up to the age of 75 years. Those subscribers who have closed their NPS accounts are permitted to open a new NPS account as per increased age eligibility norms,” PFRDA said.
The features and benefits of increased age of entry are as mentioned below:
Choice of Pension Fund and Asset Allocation
The subscriber, joining NPS beyond the age of 65 years, can exercise the choice of PF and asset allocation with the maximum equity exposure of 15% and 50% under auto and active choice respectively. The PF can be changed once per year whereas the asset allocation can be changed twice.
Exit and withdrawals
The exit conditions for subscribers joining NPS beyond the age of 65 years will be as under:
> Normal exit shall be after 3 years. The subscriber will be required to utilize at least 40% of the corpus for purchase of annuity and the remaining amount can be withdrawn as lump sum. However, if the corpus is equal to or less than ₹5.00 lakh, the subscriber may opt to withdraw the entire accumulated pension wealth in lump sum.
> Exit before completion of 3 years shall be treated as premature exit. Under pre-mature exit, the subscriber is required to utilize at least 80% of the corpus for purchase of annuity and the remaining can be withdrawn in lump sum. However, if the corpus is equal to or less than ₹2.5 lakh, the subscriber may opt to withdraw the entire accumulated pension wealth in lump sum.
> In case of unfortunate death of the subscriber, the entire corpus will be paid to the nominee of the subscriber as lump sum.
The subscribers are also eligible to open Tier II account for investing their disposable income to optimize their returns which unlike Tier-I account can be withdrawn at any time.
Never miss a story! Stay connected and informed with Mint.
our App Now!!