New NPS Rules: 6 major changes this year

new nps rules: 6 major changes this year

The National Pension System (NPS) and Atal Pension Yojana (APY) have been cornerstones in providing retirement security to millions of Indians. To ensure these systems remain efficient and user-friendly, the Pension Fund Regulatory and Development Authority (PFRDA) continuously updates their functionalities. Recently, seven major changes have been introduced to enhance the experience for subscribers and streamline operations. According to report by ET, these changes, rolled out in the last six months of FY 2023–24, are designed to address key areas like banking verification, withdrawals, and personal detail management.

Enhanced Bank Verification

The PFRDA has mandated that bank verification with name matching must be successful for processing exit or withdrawal requests and updating subscriber bank details. This new rule aims to ensure accuracy and prevent fraudulent activities, making the system more secure for subscribers.

NPS Lite Penny Drop Verification

For NPS Lite, a mandatory name verification process through Penny Drop has been introduced for withdrawals on death and partial withdrawals. This measure ensures that the identity of the subscriber is accurately verified during these critical transactions, enhancing the reliability of the system.

Flexible Scheme Preference for NPS Regular

Subscribers under NPS Regular now have the option to choose multiple Pension Fund (PF) options under the Active Choice investment strategy three months after account opening.

Systematic Lumpsum Withdrawal (SLW)

A new feature called Systematic Lumpsum Withdrawal (SLW) has been introduced for NPS Regular subscribers at the time of superannuation. This option allows subscribers to redeem their NPS corpus in periodic intervals, either selecting specific amounts to receive periodically or setting an age up to which they want to receive these amounts, as per the ET report.

Pre-Exit Bank Account Verification

Subscribers can now verify their bank account details before placing exit or withdrawal requests through their login. The option, enabled through the penny drop feature, ensures that bank details are accurate, reducing errors and streamlining the withdrawal process.

Detailed Subscriber Details Modification

A new option has been introduced for updating crucial subscriber details, including name, date of joining, date of birth, and date of retirement. Subscribers must upload supporting documents when making these changes. This process ensures that all updates are correct and verified, maintaining accurate records in the CRA system.

Online Withdrawal for NPS Lite/APY

An online facility has been implemented to enable Points of Presence (PoPs) to process death withdrawal requests for NPS Lite and APY subscribers. This includes mandatory bank details verification through the penny drop method, streamlining the withdrawal process and improving convenience for subscribers' beneficiaries.

These advancements, as detailed in the PFRDA circular dated June 14, 2024, reflect the ongoing efforts to enhance the NPS and APY frameworks, meeting the evolving needs of subscribers and stakeholders.