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What are the conditions under which NPS withdrawals can be made?

The conditions under which NPS withdrawals can be made are:

  • Retirement (Age 60) or Normal exit: Upon reaching the age of 60 (superannuation), subscribers have the option to withdraw up to 60% of their NPS savings as a lump sum. The remaining 40% must be used to purchase an annuity plan provided by the NPS. However, if the total accumulated corpus is less than or equal to ₹5 lakh, subscribers have the flexibility to withdraw the entire amount as a lump sum.
  • Partial withdrawals: After completing a minimum of 3 years as an NPS subscriber, the individual has the option for partial withdrawals. The conditions under which partial withdrawals can be made are as follows:
    • Children's education.
    • Children's marriage.
    • Purchase or construction of residential property. However, this option is not available if the subscriber already possesses a residential property.
    • Medical treatment for the subscriber, their spouse, children, or dependent parents. The medical illnesses covered can be found in this list (PDF).

      A maximum of 3 withdrawals can be made throughout the entire tenure. The amount that can be partially withdrawn are:
    • Up to 25% of their own contributions in the NPS account at any time: This withdrawal limit excludes the contributions made by the employer, if any. For example, a subscriber's total contributions over a 5-year period is ₹5,00,000. The first withdrawal is up to 25% of their own contributions, i.e. ₹1,25,000 (25% of ₹5,00,000).
    • 25% of their contributions between two partial withdrawals: For example, after the first partial withdrawal, the remaining contributions were ₹3,75,000. Over the next year, an additional contribution of ₹1,00,000 was made. After the additional contribution, the subscriber decided to make a second partial withdrawal. The second withdrawal is up to 25% of their contributions between the two partial withdrawals, i.e. ₹25,000 (25% of ₹1,00,000).
  • Premature exit: In the case of premature or early retirement, 80% of the accumulated corpus must be allocated towards the purchase of annuity plans, ensuring a steady income stream. The remaining 20% can be received as lump sum payments. Subscribers with a total corpus of ₹2.5 lakh or less have the option to withdraw the entire amount as a lump sum after a mandatory 5 years of subscription.
  • Exit upon death: If a subscriber passes away, the NPS account's entire savings will be disbursed to the nominee or legal heir. The nominee also has the option to invest the received funds in an NPS annuity plan.

Did you know? A charge of 0.125% (minimum ₹125 and maximum ₹500) is applicable for withdrawals and exits.