Systematic Lump Sum Withdrawal (SLW) from National Pension System (NPS) account may be extended up to 100 per cent so that the funds may remain under the NPS corpus for a longer tenure, PFRDA chairperson Dr Deepak Mohanty said at the NPS Chintan Shivir on Monday (Nov 20).
Recently, the Pension Fund Regulatory and Development Authority (PFRDA) provided NPS subscribers with an option to make phased withdrawals of a lump sum through SLW.
As per the latest rule, NPS subscribers can now withdraw only up to 60% of their pension corpus through the SLW on a monthly, quarterly, half-yearly or daily basis. This facility is available till the age of 75 years starting from the time of normal exit.
The SLW facility enables subscribers to withdraw small amounts on a periodic basis as per their requirements while continuing to enjoy the compounding benefit on the remaining part of their NPS corpus.
Also Read: National Pension System: New rule allows monthly withdrawal till age 75 without buying an annuity
The PFRDA chairperson’s latest proposal, if implemented, can make NPS more attractive to subscribers.
Dr Mohanty also stressed that income tax benefits to employers in the corporate sector for their contribution to NPS be revised to 12%.
The PFRDA chairperson further highlighted the social and demographic changes in India that interlink the need for pensions. He emphasized that pension corpus in some countries has crossed 100% of the GDP. However, average pension assets in India are estimated at around 16.5%.
During the Chintan Shivir, Dr Vivek Joshi, Secretary (FS), said India is growing at a faster pace and requires a lot of funds for long-term investment and many of the investment opportunities are available in the infrastructure space which match the maturity profile of investment requirement under NPS.
Dr Joshi further stressed the need to simplify the enrolment process under NPS and asked to address pain points.
The “NPS Chintan Shivir” provides a platform to stakeholders, wherein discussions and deliberations are held to generate ideas and inputs for policy formulation to achieve the envisaged goal of achieving a fully pensioned society by increasing NPS acceptance in organized and unorganized sectors.
