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The Pension Fund Regulatory and Development Authority (PFRDA) has made proposed changes to NPS withdrawal for subscribers in the month of October 2023.

The changes include instant bank account verification mandatory to ensure timely credit of National Pension System (NPS) funds to the bank account of subscribers at the time of withdrawal or exit from the scheme and proposed subscribers can withdraw up to 60% of their pension corpus through the SLW on a monthly, quarterly, half-yearly, or annual basis for a period of up to 75 years of age, as chosen at the time of their usual retirement. PFRDA made this announcement via a circular on October 27, 2023.

Systematic Lumpsum Withdrawal facility
According to the proposed rule, subscribers can withdraw up to 60% of their pension corpus through the SLW on a monthly, quarterly, half-yearly, or annual basis for a period of up to 75 years of age, as chosen at the time of their usual retirement. PFRDA made this announcement via a circular on October 27, 2023.

What is the proposed rule
According to PFRDA circular, “In accordance with Regulation 3 and Regulation 4 of PFRDA (Exits and Withdrawals under the NPS) Regulations, 2015 and amendments therein, it is proposed to provide the option of phased withdrawal of the lump sum through Systematic Lump Sum Withdrawal (SLW) facility. The subscribers are allowed to withdraw up to 60% of their pension corpus, through the SLW on a periodical basis viz. monthly, quarterly, half-yearly or annually for a period till 75 years of age as per the choice at the time of their normal exit.”

With SLW facility, on exit, on account of Superannuation, lumpsum corpus can be withdrawn in a phased manner. Subscriber has an option to withdraw desired amount systematically at regular periodic intervals.

NPS withdrawal rule change: Soon opt for phased withdrawal using Systematic Lumpsum Withdrawal facility

Modifying the subscriber’s bank account details
Instant bank account verification is now required by the Pension Fund Regulatory and Development Authority (PFRDA) in order to guarantee that subscribers’ bank accounts receive National Pension System (NPS) payments in a timely manner when they withdraw from or exit from the scheme.

According to the PFRDA circular dated October 25, 2023, “The penny drop verification has to be necessarily successful with name matching, for processing the exit/withdrawal requests, and also for modifying the subscriber’s bank account details.”

The pension regulator stated that no request for exit/withdrawal or changing the subscriber’s bank account information will be allowed if the CRA is unable to validate the penny drop.

The above-stated provision shall be applicable across sectors i.e. NPS, APY, and NPS Lite for all types of exits/withdrawals as well as for modification in subscribers’ bank account details, said the PFRDA.

NPS exit rule change: PFRDA modifies rules for withdrawal requests, modifying the subscriber’s bank account details

  • Published On Nov 3, 2023 at 04:30 PM IST

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