Good news: Now, you can invest till the age of 70 in NPS
Pension Fund Regulatory & Development Authority (PFRDA), the regulatory body that sees the supervision and regulation of pension in India has come out with a circular, where existing subscribers can remain invested under National Pension Scheme (NPS) beyond the age of 60 years or beyond their superannuation.
In addition to this, the existing age of entry, which is 18-65 years, has been revised to 18-70 years. Now, citizens above the age of 65 years can open an NPS account. 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.
Those subscribers, who have closed their NPS accounts, are permitted to open a new NPS account as per the increased age eligibility norms. The subscriber, joining NPS beyond the age of 65 years, can exercise the choice of PF along with asset allocation with the maximum equity exposure of 15 per cent and 50 per cent under auto & active choice, respectively. The PF can be changed once a year whereas the asset allocation can be changed twice.
An NPS subscriber has the freedom to allocate his contributions to different asset classes through 'active choice' or 'auto choice'. Under 'active choice', a subscriber decides on the allocation of funds across asset classes, while in the case of 'auto choice', the funds get invested in pre-determined proportion as per the age of the subscribers.
Exit and withdrawals
The exit conditions for subscribers joining NPS beyond the age of 65 years will be as normal exit after three years. The subscriber will be required to utilise at least 40 per cent of the corpus for the purchase of annuity while the remaining amount can be withdrawn as a lump sum. However, if the corpus is equal to or less than Rs 5 lakh, the subscriber may opt to withdraw the entire accumulated pension wealth in a lump sum. If a subscriber exits before the completion of three years, it shall be treated as a premature exit. Under premature exit, the subscriber is required to utilise at least 80 per cent of the corpus for the purchase of annuity while the remaining can be withdrawn in a lump sum. However, if the corpus is equal to or less than Rs 2.5 lakh, the subscriber may opt to withdraw the entire accumulated pension wealth in a lump sum. In case of the unfortunate death of the subscriber, the entire corpus will be paid to the nominee of the subscriber as a lump sum.