Learn About the Exit Related Procedures and Formalities in National Pension System

NPS is a long-term investment with a lengthy lock-in to help the wealth grow and create a decent retirement corpus. It also has well-defined procedures for all its service processes in line with its commitment to provide seamless service delivery to investors. This article explains the step-by-step procedures that investors need to follow at the time of exit from the scheme.

Procedure for exit from NPS

The procedure for exiting from NPS is common to all subscribers, i.e., Government and non-government. It consists of the following broad steps:

  1. Log in to the CRA system (www.cra-nsdl.com) using your User ID (PRAN) and Password.
  2. Click on the “Exit from NPS” menu and click on “Initiate Withdrawal request” option
  3. Update the details, including the choice of Annuity Service Provider (ASP) and Annuity Scheme.
  4. Take a printout of the system-generated Withdrawal Form, paste your photograph on it, and sign across the photograph against the declaration. Submit this form along with KYC to the respective Nodal Office (in case of Government sector) or the Point of Presence (POP) )(in case of All Citizens of India & Corporate sector).
  5. The Nodal Office will verify the form and the attached documents and authorise the withdrawal request online in CRA.
  6. Offline method: Fill the physical Withdrawal Form and then submit it to the respective Nodal Office/POP. That office will initiate the online withdrawal request on your behalf. You can download Withdrawal Form from the Forms section on this website.

Notes:

  • Before initiating a withdrawal, don’t forget to update your details (such as PAN, address, contact details, bank details, nomination, etc.) in your NPS account. If not, update those details by accessing the CRA system or submitting Form S2 to your associated Nodal Office/POP.
  • Per NPS rules, subscribers registered on or after July 1, 2014, must compulsorily submit FATCA self–certification.

Procedure for continuing the NPS account

As per the revised rules, you can continue your NPS account until you reach 70 years of age and continue to avail tax benefits. If you do that, you continue to enjoy all the facilities of a regular NPS account. This allows you to access the CRA system, the option to switch fund managers and assets class, etc., during the continuation period.

Request for continuing an NPS account need to be initiated till 15 days before the attainment of retirement age. Suppose the request is not initiated in this period. In that case, the subscriber needs to obtain approval from NPS Trust and submit a request to CRA.

The process for continuing the NPS account is as follows:

  1. You need to request the continuation online by accessing the CRA system (www.cra-nsdl.com) using your User ID (PRAN) & Password.
  2. Click on the “Exit from NPS” Menu and click on the “Request for Deferment” option. Enter necessary details and submit the ‘’Continuation’’ request.
  3. Get the request authorized from Nodal Office (in case of Government sector) or from the Point of Presence (POP) – (in case of all citizens & corporate sector).
  4. Alternatively, you can approach your Nodal Office/ POP and submit a physical request.
  5. In “All Citizens of India sector” subscribers, the NPS Account automatically continues until 70 years of age (as per PFRDA Exit Regulations). You do not need to initiate a separate continuation request.

Procedure for deferment of withdrawal from NPS

As per the NPS rules, you can defer your withdrawal and stay invested in NPS up to 70 years of age. You have an option to withdraw the deferred lump sum amount in a phased manner over 10 years or withdraw the entire amount anytime.

Take care to initiate a request for deferment till 15 days before the attainment of retirement age/completion of 60 years of age. Also, note that the subscriber cannot contribute to his account during the Deferment period.

There are multiple deferment options available as follows:

  • Defer – only lump-sum withdrawal
  • Defer – only annuity
  • Defer – both, i.e., lump sum withdrawal as well as annuity

The process for deferment of NPS is as follows:

  1. You need to initiate a deferment request online by accessing the CRA system (www.cra-nsdl.com) using your User ID (PRAN) & Password.
  2. Click on the “Exit from NPS” Menu and click on the “Request for Deferment” option. Enter necessary details and submit the deferment request.
  3. Get the request authorise from Nodal Office (in case of the Government sector) and from the Point of Presence (POP) – (in case of All Citizens of India & Corporate sector). Alternatively, you can approach your Nodal Office/ POP and submit a physical request.

Conclusion

NPS provides a lot of transparency and flexibility across the investment cycle. There are well-defined processes for each of the options that can be exercised at the time of retirement. As an investor, you need to see your unique financial situation, goals, tax situation, etc., to decide the most suitable option and exercise the same.
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