The government now allowspremature withdrawal from NPS or National Pension System under certain conditions.
NPS subscribers are eligible forthree partial withdrawals from pension scheme, with each withdrawal not exceeding 25 per cent of contributions made by him or her,Minister of State for Finance Shiv Pratap Shukla said in response to a question in Rajya Sabha on Tuesday.
The partial withdrawals from NPS account will excludecontributions made by employer, minister said.1.
The government allows partial withdrawal from mandatory Tier-I account after three years from date of joining, with effect from August 10, 2017.
Previously, Tier-1 account holder had to wait for 10 years from date of joining to be eligible for partial withdrawal facility.2.
There is, however, no restriction on withdrawals from Tier-II account of subscriber.3.The government offers two types of accounts under National Pension System: Tier 1 and Tier 2.
While Tier I NPS account is a pension account, Tier II NPS account is a savings account.4.
The government has reducedminimum required period under NPS Tier 1 account for partial withdrawal "keeping in view possibility of sudden financial needs of subscribers", minister noted.5.
With effect from August 10, 2017, government has also removed requirement of maintaining a mandatory gap of five years between two partial withdrawals.
This means that partial withdrawals up to 25 per cent from NPS Tier-1 account need not be at a gap of five years.The government in December last year raised its contribution towards National Pension System (NPS) accounts to 14 per cent from 10 per cent.
Contributions by subscriber, however, were capped at 10 per cent of basic salary.National Pension System, a government-sponsored pension scheme, was initially launched for government employees in January 2004.
In 2009, NPS was opened to all sections.