NPS Exit Rules The National Pension System is a Government-sponsored pension plan for old-age income

NPS Exit Rules The National Pension System is a Government-sponsored pension plan for old-age income for every citizen of the country. This is an extremely long-term saving scheme which a person can contribute towards to retire in his/her old age. There are various provisions under NPS such as superannuation or premature exit basis, partial withdrawal, permanent and total disability benefit, and upon death. Knowledge about NPS exit rules is crucial for subscribers. The reasons are quite self-explanatory - to enable the planning for future and in detail information provided of the various available options once he requires access to his funds. The exit rules of NPS have been studied here in diverse situations: on maturity, partial withdrawal, permanent disability, and death. 1. NPS Exit at Maturity Normal retirement age is at 60 years when the subscriber must have reached 60 years of age. At this juncture, the subscriber may exercise an option for withdrawal of accumulated corpus. Under the rules of NPS, there are the following options for exit at maturity. A. Purchase of annuity One can also mandate subscribers to invest 40% of their NPS corpus into an annuity plan upon attaining 60 years. An annuity provides for periodic income to the subscriber on retirement Any of the following annuity service providers approved by the PFRDA can sell an annuity. The subscriber can choose what kind of annuity they wish to have. Some of the most common types of an annuity include: Immediate Annuity: The annuity pays a fixed income straight away after buying the annuity. Deferred Annuity: The subscriber will start receiving the annuity payment after some time and on top of that, there is the advantage of compounding. Joint Life Annuity: It guarantees that the subscriber and the spouse receive steady income, which, after the death of the subscriber, gets continued to be paid to the spouse. An annuity would be used as a source of steady income throughout the retirement period. Therefore, at least 40% of the NPS corpus must be used to purchase it. The balance corpus is allowed to withdraw in lump sum. B. Lump-Sum Withdrawal He/she can withdraw at this stage, 60 percent of the entire accumulated corpus as a lump sum. The amount withdrawn in such a manner is tax-exempted. Thus, that money can be spent by the person for some other financial requirement, for instance, investment or purchase of a house or any other expense. Relevant, however, to the discussion above is that lump sum withdrawal shall be subject to tax treatment applicable under the then existing rules and tax policies when the retirement period occurs. Hitherto, it is nontaxable. D. Retirement Age Hiked to 70 Years NPS subscribers have the facility under certain conditions to add up to their age of retirement up to the age of 70 years. In this context, the subscriber is allowed for a more prolonged period of continued contribution to his NPS corpus However, at the time of retirement, he will have to inves