In a recent circular dated October 27, 2023, the Pension Fund Regulatory and Development Authority (PFRDA) has introduced the provision of Systematic Lump Sum Withdrawal (SLW) for National Pension System (NPS) subscribers. This move aims to enhance the flexibility for subscribers, particularly those post the age of 60 or upon superannuation.
Key Features of the Systematic Lump Sum Withdrawal (SLW):
Phased Withdrawal Option:
Under the existing exit guidelines, subscribers post 60 years or superannuation could choose to defer availing annuity and withdrawing the lump sum until the age of 75. The lump sum amount could be withdrawn in a single tranche or on an annual basis, with the subscriber initiating the withdrawal request each time.
Proposed SLW Facility:
As per the proposed changes in accordance with PFRDA regulations, subscribers will now have the option of phased withdrawal of the lump sum through the SLW facility. Subscribers are allowed to withdraw up to 60% of their pension corpus systematically, with options for withdrawal frequencies such as monthly, quarterly, half-yearly, or annually. This facility is available for a period until 75 years of age, allowing subscribers to tailor their withdrawal strategy according to their preferences.
The circular urged all Nodal offices, Points of Presence, NPST, and Corporates associated with NPS to disseminate information about SLW among subscribers approaching superannuation or reaching 60 years. Central Record Keeping Agencies (CRAs) are encouraged to publish FAQs and release educational podcasts on SLW. These resources aim to highlight the benefits of SLW and guide subscribers through the initiation process.
This circular was issued in exercise of powers conferred under section 14 (1) of The Pension Fund Regulatory & Development Authority Act, 2013.
The introduction of the SLW facility reflects PFRDA's commitment to providing NPS subscribers with more choices and control over their pension withdrawals. Subscribers now have the flexibility to design a withdrawal plan that aligns with their financial needs and preferences.