Several Changes were made to NPS rules. Now Senior citizens up to 70 years can join the scheme

The Pension Fund Regulatory and Development Authority (PFRDA) made several changes to NPS including maximum age for entry-exit rules, choice of PF & Asset allocation,   online exit facility, etc.

PFRDA vide Circular no.: PFRDA/2021/36/SUP-CRA/14 August 26, 2021, revised the age of entry to NPS from 18-65 to 18-70.

 “In response to the large number of requests received from the existing Subscribers to remain invested under NPS beyond 60 years or beyond their superannuation, and the desire from citizens above 65 years to open NPS, it has been decided to increase the entry age of NPS in the interest of Subscribers and benefit them with the opportunity of creating a long term sustainable pension wealth. The existing age of entry which is 18-65 years has been revised to 18-70 years”, it said.

The regulator also revised the guidelines in respect of entry and exit.  As per revised rule, any Indian Citizen, resident or non-resident, and Overseas Citizen of India (OCI) between the age of 65-70 years can join NPS and continue or defer their NPS Account up to the age of 75 years.  The Subscribers who have earlier closed their NPS Accounts may also open a new NPS Account as per increased age eligibility norms, it said.  The existing NPS account holders may also defer their account up to the age of 75 years. For new subscribers, joining the scheme after 65 years of age, there is a lock-in period of 3 years. The maximum age for exit is 75. Subscribers can withdraw 60% of the corpus as a tax-free lump sum and they need to use the remaining 40% for buying an annuity. However, in case the corpus is below Rs.5 lakh, the subscriber can withdraw the entire amount. The Subscriber, joining NPS beyond the age of 65 years, can exercise the choice of PF and Asset Allocation with the maximum equity exposure of 15% and 50% under Auto and Active Choice respectively. The PF can be changed once per year whereas the asset allocation can be changed twice.

In the case of a subscriber who has joined NPS between the ages of 18-60 years wishes to exit from National Pension System (NPS), he will get only 20% of his accumulated wealth under NPS as a lump sum. With the remaining amount, he will have to buy an Annuity. The 80:20 rules will be applicable for both the Government and Non-Government sector subscribers joining NPS between 18-60 years. However, in case the corpus is below Rs.5 lakh, the subscriber can withdraw the entire amount. Nevertheless, in the case of the Non-Government sector, the person should be a subscriber for 10 years.

In its circular vide no. PFRDA/2021/42/SUP-ASP/08 dated October 4, 2021, the regulator said, “The online exit would be integrated with Instant Bank Account Verification as per the existing guidelines as part of enhanced due diligence in the interest of Subscribers.

“PFRDA is pleased to extend the online and paperless process of exit to the Subscribers of Government Sector as an option in addition to the existing physical mode of exit. The online exit would be integrated with Instant Bank Account Verification as per the existing guidelines as part of enhanced due diligence in the interest of Subscribers. The facility would also be available to the employees of Autonomous Bodies of Central/State Government who are covered in NPS”, the circular said. The Central Record Keeping Agencies (CRAs) would be enabling the required technical functionalities in a time-bound manner in the interest of Subscribers before 30th October 2021, it added.

TAX BENEFITS:

Any individual who is a Subscriber of NPS can claim tax benefit under Sec 80 CCD (1) within the overall ceiling of Rs. 1.5lakh.An additional deduction for investment up to Rs. 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B). This is over and above the deduction of Rs. 1.5 lakh is available under section 80C of the Income Tax Act. 1961. We have also made, read:  SWOT analysis of NPS

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