NPS rules amended: Entry age increased, exit norms revised//

PFRDA (Pension Fund Regulatory and Development Authority) has revised the NPS guidelines on entry and exit, notable changes were on the maximum age limit for joining the NPS from 65 years to 70 years of age. 

The detailed age eligibility for entry in NPS has been revised as 18-70 years from 18-65 years. In short I have also registered in this scheme. 

As a huge relief for late entry pension subscribers in National Pension Scheme (NPS), the PFRDA has revised the rules for those joining it after 65 years of age. In a set of new rules, PFRDA has permitted them to allocate up to 50% of the funds in equity, besides easing the exit norms.

Any Indian citizen and Overseas Citizen of India (OCI) in the age group of 65-70 years can also join NPS and continue up to the age of 75 years, according to a PFRDA circular on the revised guidelines.

One of highlighted good news is “Those customers who have closed their NPS accounts have also been permitted to open a new account as per increased age eligibility norms," PFRDA said in a statement. 

The maximum equity exposure, however, will be only 15%, if subscribers joining NPS beyond the age of 65 years decide to invest, will be under the default option without any choices. A customer joining NPS beyond the age of 65 years, can have a choice of PF (pension fund) and asset allocation with the maximum equity exposure of 15 per cent and 50 per cent with respect to Auto and Active Choice.  

The NPS customer has the freedom to allocate his/her contributions to different asset classes through 'Active Choice' or 'Auto Choice'. Under 'Active Choice', the user has more way on allocation of funds across asset classes, while in 'Auto Choice' the funds gets invested in pre-determined proportion as per the age of the utilisers.

The contributions of customers are invested by the PF's (chosen by the customer) in compliance with the investment guidelines for each asset classes; namely equity, corporate bonds, government securities and alternate assets.

Customers joining the social security scheme beyond the age of 65 years can allocate only 5 per cent of the funds to alternate assets under 'Active Choice'. This asset class is not available under the 'Auto Choice' option.

"Important point to note is the PF can be changed once per year, whereas the asset allocation can be changed twice".

Normal maturity exit shall be after 3 years on the exit conditions for customers joining NPS beyond the age of 65 years, the circular said. 

One of the conditions say: The customers will be required to utilise at least 40 per cent of the corpus for purchase of annuity and the remaining amount can be withdrawn as lump sum.

However, if the corpus is equal to or less than ₹5 lakh, the user may opt to withdraw the entire accumulated pension wealth in lump sum.

The other conditions from PFRDA says; exit before the completion of three years will be treated as 'premature exit'. Under premature exit, the customer is required to utilise at least 80% of the corpus for purchase of annuity and the remaining can be withdrawn in lump sum. 

In the case of premature exit, if the corpus is less than ₹2.5 lakh, the customer may opt to withdraw the entire accumulated amount in one go. The PFRDA further said that in case of death of the subscriber, the entire corpus will be paid to the nominee as lump sum.

Other NPS customer's having a specified corpus at the time of retirement or attaining the age of 60 years need to buy an annuity, offered by insurance companies, on a mandatory basis.

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