National Pension System: The Pension Fund Regulatory and Development Authority (PFRDA) has enhanced the maximum age of joining the National Pension System (NPS) to 70 years. Also, the NPS account holders have been permitted to defer their account up to the age of 75 years.
“In response to the large number of requests received from the existing Subscribers to remain invested under NPS beyond 60 years or beyond their superannuation, and the desire from citizens above 65 years to open NPS, it has been decided to increase the entry age of NPS in the interest of Subscribers and benefit them with the opportunity of creating a long term sustainable pension wealth,” PFRDA mentioned.
The pension regulator has announced special features and advantage for these joining NPS just after the age of 65 years.
Maximum equity exposure permitted
According to the PFRDA circular dated 26th August 2021, subscribers joining the NPS just after crossing the age of 65 years can physical exercise the selection of PF and Asset Allocation with the maximum equity exposure of 15% and 50% beneath Auto and Active Choice respectively.
Such subscribers can also modify the Pension Fund as soon as per year whilst the asset allocation can be changed twice.
“The Subscriber, joining NPS beyond the age of 65 years, can exercise the choice of PF and Asset Allocation with the maximum equity exposure of 15% and 50% under Auto and Active Choice respectively. The PF can be changed once per year whereas the asset allocation can be changed twice,” PFRDA mentioned.
Who can open NPS account just after 65 years?
Any Indian Citizen, resident or non-resident, and Overseas Citizen of India (OCI) in between the age of 65-70 years can join NPS and continue or defer their NPS Account up to the age of 75 years, according to the regulator.
New Exit and Withdrawal Rules
Subscribers joining NPS beyond the age of 65 years can exit usually just after 3 years. S/he will be necessary to use at least 40% of the corpus for the obtain of annuity and withdraw the remaining quantity as a lump sum. However, if the corpus is equal to or significantly less than Rs 5 lakh, the subscriber will have the choice to withdraw the complete accumulated pension wealth in a lump sum.
Premature exit is also permitted ahead of the completion of 3 years. In this case, the subscriber will have to use at least 80% of the corpus for the obtain of annuity. S/he can withdraw the remaining in a lump sum. In case the corpus is equal to or significantly less than ₹2.5 lakh, the subscriber can withdraw the complete accumulated pension wealth in a lump sum.
In case of the unfortunate death of the subscriber, the complete corpus will be paid to the nominee of the subscriber as a lump sum.
The subscribers will also be eligible to open Tier II Accounts for investing their disposable revenue to optimize their returns. Unlike the NPS Tier-1 account, Deposits in the Tier-II account can be withdrawn at any time.