What are the new Rules of NPS? What are the changes in NPS? NPS Updates 2024. With time NPS is evolving. The intention is to help more and more people join NPS and have a prosperous retired life. That is why NPS is always changing and coming up with NPS updates or NPS Rules.
Table of Contents
Recent Highly useful NPS updates and revisions
#Inclusion of NPS (SoT) Statement of Account in CAS
Currently, the NPS Statement of Account (SoT) is shared on an annual basis either physically or through email, and it can also be viewed online in the CRA login.
As per the update on 16 Jan 2024, PFRDA has enabled CRAs to integrate with depositories registered with SEBI.
This initiative will provide NPS Subscribers, with the option to include NPS transactions in CAS.
How to avail NPS statement of Account/ NPS (SoT) with CAS
The facility to include NPS SoT in CAS will be available to NPS subscribers on a consent basis.
If the Subscriber wishes to opt for NPS SoT in CAS, the consent can be provided on the respective website. ( Please NOTE – One has to opt for it on the CRA website). Nominal Charges: A fee of Re 1/- will be applicable for each physical statement request, while 10 paise will be charged for each email statement.
The benefit of including NPS SoT with CAS is Simplified Record-Keeping, Enhanced Safety & Timely Information
#NPS Contribution through Personalized QR Code using any UPI-enabled Application( D- Remit-based Quick Response (QR) code)
Currently, the subscribers are provided with the option of contributing directly from their Bank Account using D-Remit.
The D-remit ID contains 15 digits which have to be added as a beneficiary in Internet banking while transferring voluntary contributions from the subscribers’ Savings Bank Account.
As per circular 7 Dec 2023, NPS subscribers can now contribute to their NPS accounts using the D-remit- based Quick Response (QR) code.
Now, the subscribers can scan the QR code and make contributions using any UPI-enabled application. The QR code is unique to each subscriber which can be saved offline for making payments and the QR codes are different for Tier I and Tier II.
Only subscribers who have enabled D-remit ID can make the QR code-based contributions to NPS. The subscribers can create the D-remit ID/Virtual ID on the websites of CRAs.
#Mandatory Penny drop verification – Instant Bank Account Verification for Exit / Withdrawal requests
Those who wish to make Exit / Withdrawal requests or modify their bank account details must do penny drop verification with name matching.
No request for Exit / Withdrawal, and or for modifying the subscriber’s bank account details shall be allowed in case of failure of penny drop verification by the CRA.
The above-stated provision shall be applicable across sectors i.e. NPS, APY and NPS Lite for all types of Exits/withdrawals as well as for modification in subscribers’ bank account details.
#Facility of Systematic Lump sum Withdrawal (SLW) for NPS Subscribers
As per the existing exit guidelines, the subscribers post 60 years/superannuation can defer availing of annuity & withdrawing the lump sum on any combination till 75 years of age. The lump sum amount can be withdrawn in a single tranche or it can be withdrawn on an annual basis. If withdrawn annually, the Subscriber has to initiate the withdrawal request each time and authorized.
Now NPS subscriber has the option to withdraw a lump sum ( 60% of NPS Corpus) as a phased withdrawal through the Systematic Lump Sum Withdrawal (SLW) facility.
The subscribers are allowed to withdraw up to 60% of their pension corpus, through the SLW on a periodical basis viz. monthly, quarterly, half-yearly or annually for a period till 75 years of age as per the choice at the time of their normal exit.
#NPS Taxation on withdrawal
On normal exit on Retirement (60%) or partial withdrawal is tax-free. while the annuity received will be added to income & taxed as per the slab rate. Thus NPS offer tax benefits under section 80C & 80CCD (1 B) and maturity is also tax free.
#Partial Withdrawal
The NPS subscriber can withdraw money after completion of 3 full years of NPS subscription. Now they can withdraw 25% of the total amount invested up to 3 times during the entire NPS tenure. However, withdrawal is allowed for specified reasons only.
#Increased Equity contribution Duration under Active Choice
Earlier, the subscriber could have invested a maximum of 75% in E class. This allocation is used to reduce age 51 by 2.5% each year. With this. modification now Active choice subscribers can continue the 75% E class allocation till age 60 years. In an NPS Tier 2 account, one can invest 100% of money in E Class. There is no limitation for NPS tier II.
#Change of Pension Fund & Asset Allocation in a FY
A NPS subscriber can change his Pension fund or fund allocation 4 times in a financial year.
#NPS Withdrawal Can be deferred until Age 75
NPS subscribers can defer the NPS withdrawal until age 75 and enjoy all benefits of NPS.
#Retirement Income Optimization through Multiple Annuities/ ( ASP selection)
At present, the subscribers are allowed to buy one annuity scheme from the ASP at the time of exit.
With this modification, PFRDA has introduced the choice of multiple annuities from the same ASP ( annuity service provider) will be made available.
The Subscribers who earmark the annuity corpus of more than Rs 10 lakhs wherein Rs 5 lakhs are utilized to buy each annuity scheme can opt for multiple Annuities.
#Reduction in Turnaround Time to perform various activities from T+4 to T+2-reg
As per circular 7 Feb 2022, PFRDA has introduced T+2 timelines. The timeline for processing Partial Withdrawal requests has been reduced to T+2 across all CRAs now.
For instance, those partial withdrawal requests authorized on Monday till specified timelines shall be processed such that the Subscribers’ Bank Account is credited on Wednesday, considering those 3 days are settlement days.
All NPS subscriber who have been under NPS for 3 years or more are permitted to make partial withdrawal from their own contribution to the extent of 25% up to three times for a specified reason.
