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POSTED BY ON September 28, 2010 10:48 pm ONE COMMENT
Respected Sir,
As of now, I want to know weather i have the option of withdrawing whole amount from NPS account at time of my Retirement, or is it compulsory that i get only pension , and no lumpsum amount from NPS . Also can my retirement age be flexible,say if i want to retire at age of 55yrs. than can i opt for pension at that age from NPS.
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NPS by default sets the retirement age at 60. Once you attain that age, you can use the money that has accumulated to generate a regular pension for yourself. In order to do this, you have to compulsorily buy immediate annuity from a life insurance company with 40% of the money that has accumulated. Since a minimum of 40% needs to be used to buy an immediate annuity, a maximum of 60% of the money accumulated can be withdrawn.
If you want to withdraw the accumulated amount before you turn 60, you need to compulsorily buy immediate annuity with 80% of the money that has accumulated. This is the negative feature of NPS , though it is meant to discourage premature withdrawal.
U could go for Tier 2 account when it is offered by PFRDA, as it will unlike Tier 1 account , will allow u to withdraw money as u wish.