National Pension System (NPS) subscribers can opt for the systematic lump-sum withdrawal (SLW) facility at retirement to receive regular monthly income and grow their accumulated corpus. To activate SLW, they must inform the NPS regarding the withdrawal amount and frequency. However, they can only avail of SLW until 75. After that, the account will be closed, and the NPS will transfer the balance of funds to the nominee or the legal heir.

NPS subscribers have two options for SLW. In the first option, they can set the withdrawal limit to a certain age of their choice and in the second option, they can withdraw a certain amount at a pre-determined frequency.

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Features

The NPS subscribers can opt for SLW only after retirement or when they reach 60. They also choose one of the five dates in a month for the systematic lump-sum withdrawal. Additionally, the withdrawal frequency can be weekly, monthly, quarterly, half-yearly or yearly, depending on the subscriber’s choice. For account closure or to stop withdrawals, they must request via the central record-keeping agency (CRA). Additional contributions and partial withdrawals are not allowed after the SLW facility activates. Also, the SLW is not available for those below 60.

Benefits of SLW

Cash Flow: The systematic lumpsum withdrawal (SLW) facility enables retirees to receive regular monthly income while growing their accumulated corpus. It solves the cash flow problem seniors face after retirement when salaries stop.

Wealth Creation: Those opting for SLW will receive the lumpsum in instalments, so the rest of the funds lie with NPS. This allows the fund to continue accruing interest and growing until the subscriber reaches 75, at which point the account will be closed. Hence, this facility can also help them grow their wealth over time.

Also Read: NPS Funds Register Robust Growth, Driven By 34% Surge In Annual Equity Returns: Report

As of March 1, 2024, 7.92 lakh new members had joined the NPS scheme, whose assets total assets jumped to Rs. 11.50 lakh crore, driven by positive market momentum. The average annual equity returns of NPS funds surged more than 34 per cent, exceeding corporate and government bonds and state government schemes, it has been reported.

NPS offers two schemes: Tier 1 and Tier 2. Those who already have the Tier 1 account can only open the Tier 2 account. NPS invests in various equity instruments, government and corporate bonds, alternative investment tools, etc. Investors can withdraw up to 60 per cent of the funds in a lump sum after retirement at 60 or opt for SLW. They must invest the remaining amount in annuity. Both Indian and non-resident Indians can open an NPS account.