Know about the new NPS requirements, including the raised entry age and amended exit guidelines

National Pension Scheme

National Pension Scheme

There's some good news for retirees who want to put money into the National Pension Scheme (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) has updated the rules for older individuals who join the National Pension Scheme (NPS) after turning 65.

The updated guidelines now allow older persons to open an NPS account until they reach the age of 70. The exit requirements have also been relaxed by the PFRDA.Furthermore, members who join the programme after the age of 65 can invest up to 50% of their cash in equities, according to the PFRDA.

What is the National Pension Scheme (NPS)?

The National Pension Scheme (NPS) is a voluntary retirement savings scheme that allows subscribers to make a specified commitment to planned savings, safeguarding the future in the form of a pension. It offers seniors with a sufficient retirement income.

Through 'Active Choice' or 'Auto Choice,' an NPS member can allocate his or her payments to different asset classes. A subscriber with 'Active Choice' has more control over the allocation of money among asset classes, whereas with 'Auto Choice,' funds are invested in a predetermined percentage based on the subscribers' age.

What are the revised guidelines?

The PFRDA has updated the entry and exit standards, raising the maximum age for joining the NPS from 65 to 70 years old. As a result, the NPS entry age has been raised to 18-70 years old from 18-65 years old.Furthermore, any Indian citizen or Overseas Citizen of India (OCI) between the ages of 65 and 70 can invest in NPS and participate in the plan until they reach the age of 75.

Subscribers who have closed their NPS accounts will be able to open new accounts under the enhanced parameters, as long as they meet the increased age eligibility criteria.However, if investors over the age of 65 choose the 'Auto Choice,' the maximum equity exposure will be 15%, while the maximum equity exposure would be 50% if they choose the 'Active Choice.'PFRDA stated that for subscribers who join NPS after the age of 65, the normal exit period will be three years.

Exiting before the three-year period has ended will be considered 'premature exit,' according to the PFRDA.The entire corpus will be given to the nominee as a lump sum if the subscriber dies, according to PFRDA.

Source: India Today



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