‘Clear exit rules will encourage NPS participation’: Finance Ministry

New Delhi: Significant amendments to the PFRDA (Exit and Withdrawal under NPS) Regulations, 2015 will provide subscribers with greater flexibility, choice and autonomy in investment decisions and help manage accumulated retirement wealth, the finance ministry said on Friday.

The pensions regulator notified regulations earlier this week, paving the way for greater flexibility in exit options, improved lump sum withdrawal thresholds and clearer, structured provisions for nominees and legal heirs, while strengthening transparency in NPS models for government, non-government and all citizens.

In its statement, the Ministry noted that the changes primarily aimed at the non-governmental sector also rationalized the provisions for the public sector.
“Clear and well-structured exit provisions are expected to encourage entry and sustain participation by balancing subscriber needs and retirement objectives at different stages of their lifecycle.” He added that the changes reflect evolving subscriber needs and aim to make the NPS more inclusive, responsive and subscriber-friendly while maintaining long-term retirement income security.

The new guidelines provide that for the subscriber registered as NPS-Lite or Swavalamban subscriber under the National Pension System, if the subscriber’s accumulated pension wealth is equal to or less than ₹ 2 lakh, such subscriber will have the option to withdraw the entire accumulated pension wealth in lump sum.