Unlock Financial Support: Withdraw up to 25% from NPS for Child’s Education, Marriage, or Serious Illness Treatment

If your previous life has been comfortable enough to afford the earnings from your hard work to be a part of the National Pension Scheme (NPS), this information can be useful for you.

You may have saved money diligently and secured it in the NPS, but there are situations that can unexpectedly arise. It could be the need for higher education for your children, sending them abroad, facing a serious illness, or encountering any unforeseen financial requirements.

In such situations, there is no need to worry. You can withdraw money from your NPS account. NPS allows you to withdraw money in emergencies.

Indeed, the Pension Fund Regulatory and Development Authority (PFRDA) has made some minor changes in the rules for withdrawing money from the National Pension Scheme (NPS). These new rules will come into effect from February 1, 2024. This information can be valuable for those depositing money in NPS.

Various Opportunities for NPS Subscribers

NPS subscribers can earn a fixed amount for the higher education of their children or adopted children.

Money can be withdrawn from the account for the marriage of children.

You can withdraw money from your individual or joint account for buying a house, constructing a house, or purchasing a flat in your name or in a joint account.

During a serious illness or hospitalization, money can be withdrawn from the NPS account to cover medical expenses.

Even if you become medically incapacitated or disabled due to an accident, you can still earn money from NPS.

Money can be earned for any skill development or course.

It is possible to withdraw money for starting a startup or company.

Your portfolio, either active or auto-choice, can be managed for the best results.

NPS gives you the freedom to design your portfolio. You can invest your money actively or in auto-choice mode. You can allocate your money in four ways: Equity (E), Corporate Debt (C), Government Securities (G), and Alternative Investment Funds (AIF).

If you choose not to invest actively, NPS will automatically choose the option for you.

Dynamic and Automatic Investment Choices in NPS

You need to decide how you want to invest in NPS. If you do not choose, NPS will automatically select the investment option based on your age. As a person’s age increases, their investment in equity and corporate debt decreases, while investment in government securities increases.

Apart from this, you can also choose your pension fund manager, who can invest your money in suitable places.

Tax-Free Income through NPS

If you have invested in the National Pension Scheme (NPS), you can earn a completely tax-free amount. If you make contributions to NPS, you can earn returns on your total corpus until the age of 60.

You can withdraw up to 60% of your total corpus when you reach the retirement age of 60. The remaining 40% amount can be used to purchase an annuity. Both these amounts are exempt from taxation under Section 80-CCD of the Income Tax Act, 1961.

Assuming that you reach your retirement age at 60, and your NPS account has accumulated around 30 lakh INR, you can earn an income from this amount. In this scenario, you can earn only 60% of this amount, which is 18 lakh INR.

Government and Private Employees Can Avail Benefits

Both government and private sector employees can avail themselves of the benefits of this scheme. The National Pension Scheme was initiated by the central government on January 1, 2004. Initially, this scheme was only for government employees.

However, since 2009, employees in the private sector can also enjoy the benefits of this scheme. The scheme is designed to ensure a secure and happy retirement for retirees.

Eligibility for NPS Benefits

Any Indian citizen or Non-Resident Indian (NRI) can open an NPS account. Foreign citizens residing in India, Indian-origin foreign citizens, and Hindu Undivided Families (HUFs) cannot become members of NPS.

Individuals within the age range of 18 to 70 can participate in this scheme. They must also complete the Know Your Customer (KYC) update. Note that NPS is an individual pension account, so you cannot open another NPS account for yourself.