Is it possible to withdraw your NPS corpus?

Reset your investment clock with NPS for tax benefits and retirement corpus, understanding withdrawal rules and options.

It’s time to wipe the slate of last financial year and the clock of investment must be reset based on your current goals. One of the advantages of the National Pension Scheme (NPS) is it offers both tax incentives and a retirement corpus.

Now that the no-tax limit under the New Tax Regime (NTR) has been increased to ₹12,00,000, the need for investing in NPS just for the sake of availing tax-benefit has reduced considerably. Against this backdrop, question arises if the NPS corpus could be withdrawn; if so, what are the rules? Let’s dive into details.

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NPS provides two types of accounts for all its citizens — Tier-1 (mandatory) and Tier-2 (optional). For opening a Tier-2 account, you must have a Tier-1 account. Both the accounts differ from each other in terms of tax benefits as well as withdrawal rules.

Tier-1 is the default individual Pension Account for building retirement corpus. After retirement, subscribers of NPS will get pension from the chosen Annuity Service Providers (ASPs) as per the agreed terms and conditions.

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Tier-2 acts like a savings account. In both the accounts, you can gain exposure to four kinds of assets: equity instruments, corporate bonds, Government Securities and Alternative Investment Funds (AIF). In Tier-1, maximum exposure to equity is 75% and AIF 5%. However, in Tier-2, 100% equity exposure and 5% AIF is possible.