Curated By: Business Desk
Last Updated: October 28, 2023, 19:24 IST
The step has been taken by PFRDA to ensure timely transfer of NPS funds to the subscriber’s account.
The NPS withdrawal procedure, or exit from the scheme, now requires a successful verification of the bank account, according to the latest circular issued by PFRDA.
The Pension Fund Regulatory and Development Authority (PFRDA) has recently made some changes to the rules for withdrawals from the National Pension System accounts. According to the latest circular issued by the PFRDA, instant bank account verification is mandatory for advance withdrawals from NPS. The same will also be applicable for exiting the scheme.
The step has been taken by PFRDA to ensure timely transfer of NPS funds to the subscriber’s account in case of withdrawals or exit from the scheme.
A circular dated October 25, 2023, issued by PFRDA mentioned that NPS name matching, exit, and withdrawal requests require penny-drop verification, according to an Economic Times report. In addition, penny-drop verification must be successfully completed for any alterations to the customer’s bank account details.
What are the changes in the NPS withdrawal rules?
PFRDA has clarified that if the Central Record Keeping Agency (CRA) fails in penny-drop verification, no request regarding changes in the customer’s bank account will be accepted. In such cases, the CRA will address the issue by involving the relevant nodal office or intermediary. They will initiate the necessary steps to correct the subscriber’s bank account information by following the required procedure.
Furthermore, in the event of a penny-drop verification failure, the CRA will promptly inform the subscriber through mobile and email, advising them to get in touch with the nodal officer or POP for resolution. In addition, the CRA will also communicate the bank account verification failure to the nodal office or POP.
While the NPS withdrawal request procedure has changed, the rules for withdrawal limit remain the same as before. As far as NPS withdrawal limits are concerned, the PFRDA regulations mention that if a member has a total deposit and interest of less than Rs 5 lakh, they can withdraw the entire amount at once. However, if it exceeds this limit, 40% of the amount will be kept for annuity options, and the remaining 60% can be withdrawn as a lump sum.
NPS interest rate
The NPS interest rate varies from 9% to 12% depending on the scheme chosen by the member. However, there is no fixed rate of return for NPS investments. The interest is calculated every month on a compounding basis and is transferred by government authorities. Moreover, the NPS interest rates are generally higher than fixed income instruments, such as Fixed Deposits (FDs).