Need money in an emergency? NPS amount can be withdrawn before retirement, know what is the claim process

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Money Guru: People invest in different policies while planning their retirement. At the same time, there are many types of pension schemes available in the market, out of which people consider National Pension Scheme (NPS) as a better option. Besides enhancing your pension, NPS can be a great option for emergency fund. By this, if the NPS account holder does not nominate anyone, then how can the money be withdrawn from the account after the death of the account holder? There is a whole process for this too. Let’s know all important things related to National Pension Scheme (NPS).

What is NPS?

In the National Pension System (NPS), the account holder gets the benefit of pension after retirement to which both employer and employee contribute. With this, if the account holder needs emergency funds before retirement, you can withdraw 60% of the deposit at the time of retirement. However, 40 percent of this amount is required to be put towards pension.

Important Rules of NPS

Changes have been made in some rules related to National Pension System (NPS). The age limit for investing in NPS is 18-70 years. Earlier the age limit for investing in NPS was 65 years. Indian citizens aged 65-70 can invest in OCI NPS. The age limit for joining the pension fund is 70 years. At the same time, withdrawal rules from NPS have also been eased. This has made it easier to make lump sum withdrawals of Rs 5 lakh or less. Of this, it is mandatory to take annuity from 40 percent of the amount. Allotment of up to 50% in equity is possible after 65 years and withdrawal before 3 years will be treated as early exit. On withdrawal before maturity, it is necessary to take annuity from 80% and can withdraw early – less than Rs 2.5 lakh.

How to withdraw from NPS

NPS has several withdrawal options. It is partially withdrawable after 3 years. At the same time, the investment can be stopped after 10 years. At the same time, it is possible to withdraw at the age of 60.

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What are the rules for withdrawing money in NPS?
Partial withdrawal

  • Invest in NPS for at least 3 years
  • 25% withdrawal from subscriber’s total contribution
  • A total of 3 withdrawals can be made during the subscription period
  • Part can be withdrawn for some important reasons

What are the partial withdrawals from NPS?
What is possible?

  • For higher education of children
  • For children’s marriage
  • Home buying and renovation
  • For treatment of serious illness

Rules for complete withdrawal from NPS

  • Subscriber age below 60 years
  • In such a scenario, a withdrawal of 20% of the corpus is possible.
  • The remaining amount will be invested in an annuity
  • Corpus if less than 1 lakh
  • In this case, you can withdraw the entire corpus
  • Once the account is closed, it cannot be reopened.

Rules for withdrawal from NPS after retirement

  • 60% of the corpus can be withdrawn on retirement
  • 60% withdrawal tax free, rest invested in annuity
  • If the corpus is Rs 2 lakh or less, the full amount can be withdrawn

Amount for NPS-Nominee

  • In case of death before the age of 60, the amount to the nominee
  • Government Servants – 80% of the amount required to take annual plan
  • One time payment of remaining amount to nominee of Government servant
  • 100% refund if less than Rs.5 lakhs
  • Non-Government Servant-Nominee will get 100% amount

How to claim withdrawal from NPS without nominee?

  • If the account holder dies before the appointment, the amount will go to the legal heir
  • Inheritance certificate is required for claim amount
  • The certificate will be submitted to the State Revenue Department
  • After verification, the deposit will be released to the family

Documents Required for NPS Death Claim

  • Death certificate of account holder
  • Aadhaar card of the account holder
  • Nominee/Successor Aadhaar Card
  • Succession certificate

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