PFRDA chairperson Dr Deepak Mohanty said at the NPS Chintan Shivir on Monday (Nov 20) that Systematic Lump Sum Withdrawal (SLW) from National Pension System (NPS) accounts may be expanded up to 100 percent so that funds remain within the NPS corpus for a longer duration. The Pension Fund Regulatory and Development Authority (PFRDA) recently gave NPS customers the option of making staggered lump sum withdrawals using SLW.
NPS subscribers can now withdraw up to 60% of their pension corpus through the SLW on a monthly, quarterly, half-yearly, or daily basis, according to the current rule. This service is accessible until the age of 75, beginning with usual exit.
The SLW feature allows members to withdraw small sums on a periodic basis as needed while continuing to benefit from compounding on the remaining portion of their NPS corpus. If implemented, the PFRDA chairperson's latest proposal could make NPS more appealing to subscribers. Dr. Mohanty further emphasized that income tax benefits for business employers contributing to NPS should be increased to 12%.
The PFRDA chairperson also emphasized the socioeconomic and demographic developments in India that are intertwined with the demand for pensions. He emphasized that the pension fund in certain nations has surpassed 100% of GDP. In India, however, average pension assets are expected to be around 16.5%.
Dr Vivek Joshi, Secretary (FS), stated during the Chintan Shivir that India is growing at a faster rate and requires a lot of funds for long-term investment, and that many investment opportunities are available in the infrastructure space that match the maturity profile of investment requirements under NPS. Dr. Joshi also emphasized the importance of simplifying the NPS enrollment process and requested that pain areas be addressed.
The "NPS Chintan Shivir" provides a platform for stakeholders to hold conversations and debates in order to create ideas and inputs for policy formulation in order to attain the desired aim of achieving a fully pensioned society by growing NPS adoption in both the organized and unorganized sectors.
