The National Pension System (NPS) is a government-backed small savings schemes for retirement. It provides subscribers a monthly pension besides a lump sum amount at retirement. The subscriber can withdraw up to 60 per cent of the accumulated corpus, while the rest must be reinvested in an annuity plan for pension based on the chosen plan. Investments in NPS allow tax deductions up to Rs 1.5 lakh in a financial year under section 80 C of the Income-tax Act, 1961.

However, at maturity, the NPS system offers flexibility in withdrawals depending on the subscribers’ requirements. Here are five benefits that NPS offers to subscribers at maturity.

Also Read: Explainer: How To Exit From NPS After Reaching 60—Know The Rules And Procedures

Pension Benefits

After retirement or when reaching the age of 60, the subscriber can withdraw up to 60 per cent of the accumulated NPS funds in a lump-sum. Additionally, if the NPS corpus is equal or less than Rs 2 lakh, the subscriber is permitted to withdraw the full amount at maturity.

Death Benefits

In case the subscriber dies, the nominee will be eligible to receive the accumulated NPS corpus, provided the subscriber selects a nominee at the time of account opening. In case the subscriber has not named any nominee, the NPS corpus will be divided among the family members or the eligible legal heir(s) based on the legal heir certificate. The nominee or the legal heir(s) can also opt for an annuity plan if they do not need the money in a lump-sum.

Premature Closure/Early Retirement

If the subscriber decides to close the account prematurely due to an emergency or voluntary retirement before 60, the subscriber is allowed to withdraw only 20 per cent of the funds and the rest must be invested in annuity. In case the closure is due to incapacitation, the withdrawal limit is 60 per cent of the accumulated funds, while the rest must be reinvested in an annuity plan.

Also Read: Only 76 Of Over 17,000 Companies In North East Opted For NPS So Far: PFRDA Chairperson Deepak Mohanty

Systematic Lump-Sum Withdrawals

Additionally, the subscriber can opt for systematic withdrawals if they do not want to withdraw the 60 per cent of the corpus in one go at retirement. The SLW plan allows the subscriber to withdraw the funds at a pre-determined frequency or age. The subscriber can choose to receive the money in monthly, quarterly, half-yearly or yearly modes. This option allows subscribers to withdraw the money in intervals allowing the funds to accumulate more interest.