What new NPS withdrawal rules mean for retirement
The article details recent amendments by PFRDA to the National Pension System (NPS) exit/withdrawal norms. The mandatory annuity portion has been reduced from 40% to 20%, allowing subscribers to withdraw up to 80% of their corpus as a lump sum (up from 60%). Specific rules apply for smaller corpus sizes (up to ₹8 lakh and ₹8-12 lakh). A key point highlighted is that while more can be withdrawn, only 60% remains tax-exempt under Section 10(12A) of the Income Tax Act, meaning the additional 20% is taxable. The article also introduces the new Retirement Income Scheme (RIS), which allows gradual, systematic withdrawals (SLW or SUR) from the non-annuity portion, keeping the balance invested. RIS is compared to Mutual Fund Systematic Withdrawal Plans (MF SWP) regarding flexibility, cost, and tax treatment, offering subscribers more control over their retirement funds.
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