PFRDA allows NPS subscribers to withdraw up to 60% of their pension corpus through SLW facility

The Pension Fund Regulatory & Development Authority (PFRDA) allows a Systematic Lumpsum Withdrawal (SLW) facility for NPS subscribers; pensioners can withdraw up to 60% of funds periodically. 

The PFRDA has proposed a Systematic Lump Sum Withdrawal (SLW) facility for its pensioners. This allows NPS subscribers to withdraw up to 60% of their total pension corpus in instalments, monthly, quarterly, half-yearly or annually until a subscriber turns 75. 

Per the existing exit guidelines, the subscribers post 60 years/superannuation can defer availing of annuity and withdrawing the lump sum on any combination till 75 years of age. The lump sum amount can be withdrawn in a single tranche, or it can be withdrawn on an annual basis. If withdrawn annually, the subscriber has to initiate the withdrawal request each time and authorise it. 

The regulator encouraged authorities and stakeholders to inform those nearing the age of 60 or looking to exit the National Pension Scheme about the SLW facility. Central Record Keeping Agencies are also urged to provide detailed information about SLW on their online platforms. 

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“All Nodal offices, Points of Presence, NPST and Corporate can disseminate the information about SLW for the associated Subscribers who superannuate or are reaching the age of 60 years and plan to exit from NPS. Central Record Keeping Agencies (CRAS) can publish FAQs and release educational podcasts on SLW, highlighting its benefits and explaining the process of initiating SLW on their websites and social media platforms, per the PFRDA circular. 

What it means for you: During the investment stage of NPS, the subscriber can invest between the ages of 18 – 70 years and stay invested till the age of 75 years. Post attaining the age of 60 and latest by 75, the subscriber must compulsorily buy an annuity with atleast 40% of his corpus.

Kurian Jose, CEO of Tata Pension Management, said, “The remaining corpus can be withdrawn as a lumpsum or periodically using a systematic lumpsum withdrawal (SLW) methodology. SLW offers the subscriber an additional advantage of withdrawing his retirement corpus on a systematic and periodic basis, which could earlier be removed only on a lump sum basis or annually by having to necessarily give a redemption request. Withdrawal using the recently introduced SLW methodology helps in supplementing the pension a subscriber would receive on purchase of an annuity. This feature can be opted at the time of Retirement and is applicable only on Lumpsum NPS corpus post purchase of the annuity. SLW is suitable for all retirees who want to benefit from systematic cash flows in their post-retirement phase, allowing them to meet their periodic expenses. This is also beneficial as the SLW can be opted as a onetime request and the cash flow would flow periodically as selected by the NPS subscriber."

NPS is the closest to a social security scheme in India. It works on a defined contribution basis wherein a subscriber invests in the capital market (equity, govt securities, corporate bonds and alternative assets) as per their respective risk appetite to build up a retirement corpus.