Nation Pension System withdrawal rule to change for these subscribers from New Year

Employees of the federal, state and central autonomous organisations who are National Pension System (NPS) subscribers will no longer be able to partially withdraw funds from their NPS accounts by self-declaration.

This comes after the Pension Fund Regulatory Development Authority (PFRDA) circular that was published on December 23, 2022. All subscribers in the public sector must now submit their requests for partial withdrawals through the relevant nodal agencies.

PFRDA has issued a circular stating "partial withdrawals under NPS through self-declaration for the benefit of subscribers as a special dispensation to cope with the Covid pandemic in order to protect the subscribers’ interest and ease the burden of nodal officers including POPs from verification and authorization. The circular also provided for the option of submission of the partial withdrawal requests by the subscribers through their nodal office/POPs as per the prevalent practice."

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The pension fund authority had let government sector subscribers make partial withdrawals from NPS accounts through self-declaration during the Covid epidemic. The choice was made at a time when several states asked the regulator to reimburse their employees' pension funds. The states want to reinstate the previous pension plan (OPS).

To protect subscribers' interests and lessen the burden on nodal officers, including POPs from verification and authorization, PFRDA issued a circular in January 2021 allowing partial withdrawals under NPS through self-declaration for the benefit of subscribers as a special dispensation to deal with the Covid pandemic.

The provision for partial withdrawal through self-declaration for subscribers who are voluntarily outside of the government has not changed, nevertheless.

“The subscribers belonging to the voluntary segment of the NPS (All citizens and corporate) may continue to use the process as mentioned in the cited circular,” the regulator said.