Your money: Now people between the ages of 65 and 70 can register for the NPS


Subscribers who have closed their NPS accounts may open a new account subject to age eligibility standards.

The Pension Funds Regulatory and Development Authority (PFRDA) has raised the age of entry into the National Pensions System (NPS) from 65 to 70. Any Indian Citizen, Resident or Non-Resident and Overseas Citizen of India between the ages of 65 and 70 can join the NPS and continue or defer their NPS account until they reach the age of 75. Subscribers who have closed their NPS accounts may open a new account subject to age eligibility standards.

In fact, the regulator changed the rules allowing existing subscribers to continue to subscribe to the pension fund until they turn 70. A subscriber must write to NPS trust or any intermediary at least 15 days before turning 60 or retiring. The subscriber will also have the option of deferring the purchase of the annuity for a maximum period of three years from the date of reaching age 60 or retiring.

Asset allocation
The regulator said in a circular that a subscriber joining NPS after the age of 65 can exercise choice of pension fund and asset allocation with a maximum equity exposure of 15% and 50% under the automatic and active choice, respectively. A subscriber can change pension fund once a year and the asset allocation can be changed twice.
Currently, private sector subscribers to the NPS can invest up to 75% in equities under the active choice option. One can opt for the life cycle fund where the equity exposure will decrease as one gets older. The three lifecycle funds are: a moderate lifecycle fund (with a cap of 50% of equity), an aggressive lifecycle fund (LC 75) with a cap of 75% of equity and the third, a conservative life cycle fund (LC 25) with an equity cap of 25%. %.

Exit and withdrawals
A subscriber who joins the NPS after age 65 can leave after three years. He will have to use at least 40% of the corpus for the purchase of an annuity and the remaining amount can be withdrawn as a lump sum. However, if the corpus is equal to or less than `5 lakh, then he can withdraw the entire accrued pension wealth in a lump sum.

Any exit before the end of the three years will be considered an early exit. In the context of an early exit, the subscriber must use at least 80% of the corpus for the purchase of an annuity and the rest can be withdrawn in a lump sum. However, if the corpus is equal to or less than `2.5 lakh, the subscriber can withdraw the entire accrued pension wealth in a lump sum. In the event of the unfortunate death of the subscriber, the entire corpus will be paid to the subscriber’s agent in the form of a lump sum.

Level II account
Subscribers over the age of 65 can open a Tier II account to invest their disposable income. A Tier II account allows a subscriber to withdraw money at any time without any restrictions or penalties. Contributions to the Level II account can be made using the PRAN and a subscriber can choose between equity funds, government securities and fixed income instruments.

However, one does not receive any tax benefit on investing in a Tier II account as it has no fund lock-in period unlike the Tier 1 account. level II are imposed. Withdrawals within one year of investment incur short-term capital tax, while those after one year of deposit incur long-term capital tax. In a Tier I account, a subscriber enjoys a tax benefit of `1.5 lakh under Section 80 of the Income Tax Act. In addition, the subscriber benefits from a tax deduction of £50,000 under section 80CCD 1(B). Maturity proceeds are tax exempt.

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