The National Income System (NPS), administered by the Pension Fund Regulatory & Development Authority (PFRDA), is a voluntary retirement programme for people who want to earn a sizable income after reaching the age of 60. The NPS provides subscribers with three different ways to exit: premature exit/voluntary retirement, which allows subscribers to do so before age 60 and receive superannuation; normal exit, which allows subscribers to do so at age 60 or older and receive superannuation; and exit upon the unexpected death of an account holder.

The subscriber has the option of delaying both lump sum and annual withdrawal options from NPS after retirement, up until the age of 75. One must give up this scheme after 75 years. The default option, however, permits annual withdrawals of at least 40% of the deposit amount and one-time withdrawals of the remaining 60%. Additionally, the customer has the choice to withdraw the full amount once a year.

You have the choice to leave NPS either offline or online. You can process your request by OTP or e-sign to exit the scheme online. Customers will be able to log in to the Central Record Keeping Agency (CRA) system and file an exit request using the online process, according to PFRDA. Here, they must provide information regarding the exit.

The customer can choose the option of a lump sum or annual withdrawal. The consumer requires to give information regarding fund allocation, annuity service provider (ASP), annuity scheme, etc. for this. KYC and other documentation must also be uploaded in addition to this. Following that, POP uses ‘Instant Bank Account Verification’ to confirm the customer’s bank account number and uploaded documents. The customer must also pay the associated fees to process this request. These fees range from a minimum of Rs 125 to a maximum of Rs 500, and they amount to 0.125 percent of the total capital.

Upon leaving the NPS, subscribers can benefit from tax advantages. Tax exemption applies to lump sum withdrawals up to 60% of the total accrued pension asset. Additionally, the money used to buy an annuity (for receiving a pension) is tax-free. However, the money from the annuity that is periodically withdrawn as a pension is taxed according to the tax bracket of the recipient.

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