The Pension Fund Regulatory and Development Authority (PFRDA) has allowed investors to partially withdraw money from their Tier-I National Pension System (NPS) accounts to meet expenses related to treatment of coronavirus infection.
The PFRDA has, through a circular issued on April 9, 2020, declared coronavirus infection as a critical illness that is life threatening in nature. Accordingly, partial withdrawal from NPS has been allowed for covering expenses related to the treatment of COVID-19.
If you need to withdraw money from your Tier-I NPS account for the treatment of COVID-19, here’s all you need to know.
For whom money can be withdrawn
As per the circular, the money can be withdrawn for the treatment of the NPS subscriber, legally wedded spouse, children (including a legally adopted child) or dependent parents.
Documents required for withdrawing money
Puneet Gupta, Director, People Advisory Services, EY India says “To make a partial withdrawal, an individual will be required to provide a medical certificate along with a duly filled form requesting a partial withdrawal.”
Amount that can be withdrawn
Partial withdrawal from NPS is permitted for various purposes such as higher education of children, marriage of children, purchase or construction of residential house and treatment of specified illnesses.
As per the current rules, the amount of money that can be withdrawn from the NPS account cannot exceed 25 per cent of the individual’s self contribution. However, there is an additional condition that must be met for withdrawing the money. Gupta says, “The partial withdrawal will be allowed if the subscriber has completed at least three years as NPS member. Such partial withdrawal to the extent of 25 per cent of individual’s own contribution is not taxable.”
The amount of money that can be withdrawn will depend on the credit standing in the subscriber’s Tier-I NPS account. For instance, if the subscriber has deposited Rs 1 lakh every year in NPS for four years (excluding any contribution made by subscriber’s employer), the maximum amount that he/she is eligible to withdraw from his/her NPS account will be 25 per cent of Rs 4 lakh, i.e., Rs 1 lakh.
Gupta adds, “Ensure that you have previously not exceeded the limit on number of withdrawals that can be made from the NPS account. NPS account allows partial withdrawal only for a maximum of three times during the entire tenure of the NPS account. No further partial withdrawals are allowed once the limit is exhausted.”
Steps to withdraw money from NPS account
Gupta explains the steps involved in withdrawing money online from the NPS Tier-1 account.
Step 1: Log in to your NPS account by visiting https://www.cra-nsdl.com/CRA/. Your user ID will be the PRAN, i.e., Permanent Retirement Account Number issued to you.
Step 2: Once you have successfully logged in to your NPS account, select the ‘Withdrawal’ option under the ‘Transact Online’ tab as shown on the screen.
Step 3: Under the ‘Withdrawal’ option, select the ‘Partial withdrawal from Tier-I’ option.
Step 4: A new webpage will open on your screen. You will have to confirm your PRAN. If the PRAN is correct, click on ‘Submit’. The webpage will ask you to submit the system generated form along with the other supporting documents to your Nodal office for further processing.
Step 5: A new tab will open containing details such as PRAN, name, date of birth, the amount available for withdrawal etc. You will be required to mention the percentage of withdrawal you want to make. Remember the maximum withdrawal that can be made by you cannot exceed 25 per cent of your contribution. Also, you will be required to select the reason for your partial withdrawal. Click on submit.
Once submitted, a system-generated form will be available for download. You will be required to send this form along with the medical certificate to the nodal office. Once the nodal office processes your request, the money will be credited to your account.