Centre permits partial withdrawal to NPS subscribers

New Delhi [India], May 5 (ANI): Partial withdrawals will now be allowed to subscribers under the National Pension System (NPS), who wish to improve their employability or acquire new skills by pursuing higher education/ acquiring professional and technical qualifications, the Centre stated on Friday.

Following the Board meeting of the Pension Fund Regulatory and Development Authority (PFRDA), it was decided that individual NPS subscribers who wish to set up a new business or acquire a new one will be allowed to make partial withdrawals from his/her contributions.

The PFRDA, in order to simplify and improve the operational issues in the NPS like new functionality development under NPS architecture, simplification of account opening, withdrawal and grievance management, took a number of important decisions to improve the operational and regulation issues in the aforementioned scheme.

A proposal put forth on changing the investment grade rating from 'AA' to 'A' for corporate bonds was approved. However, the authority said the change would be subject to a cap on investments in 'A' rated bonds to be not more than 10 percent of the overall corporate bond portfolio of the pension funds. This initiative, the government believes, will enlarge the scope of investment for fund managers while ensuring credit quality.

Furthermore, the adoption of a common stewardship code was approved as a measure of good corporate governance. It was also decided that the principles enumerated in such code shall be circulated to all pension funds for compliance and implementation.

Under the present scheme, increasing cap on equity investment in active choice for private sector subscribers involves a cap of 50 percent on equity investment under active choice in NPS. However, the PFRDA Board in its meeting approved a proposal on increasing this cap to 75 percent, with a clause of tapering of the equity allocation after the age of 50 years.

On a related note, the NPS and the Atal Pension Yojana (APY) have a cumulative subscriber base of over 2.13 crore with total Asset Under Management (AUM) of more than Rs. 2.38 lakh crore.

For those unversed, the APY scheme was launched in June 2015. Under the scheme, a subscriber would receive a minimum guaranteed pension of Rs.1000 to Rs.5000 per month, depending upon his contribution, from the age of 60 years. The same pension would be paid to the spouse of the subscriber and on the demise of both the subscriber and spouse, the accumulated pension wealth is returned to the nominee. (ANI)

This story has not been edited. It has been published as provided by ANI