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Government allows premature withdrawal from New Pension Scheme Fund

The Government has allowed premature withdrawal from New Pension Scheme Fund. A subscriber is now eligible for three partial withdrawals during the period of subscription under National Pension System (NPS), each withdrawal not exceeding 25 per cent of
the contributions made by the subscriber, excluding contributions made by the employer. 

However, there is no restriction on withdrawals from the Tier-II account of the subscriber. Keeping in view the possibility of sudden financial needs of the subscribers, the requirement of the minimum period under National Pension System (NPS) for availing the facility of partial withdrawal from the mandatory Tier-I account of the subscriber has been reduced from 10 years to 3 years from the date of joining w.e.f. August 10, 2017, the official release stated.

According to the Ministry of Finance official release, the minimum gap of 5 years between two partial withdrawals has also been removed w.e.f. August 10, 2017.

It may be noted that the government approved the proposals pertaining to choice of Pension Fund and investment pattern for Central Government subscribers under NPS, in December last year. The central government subscribers are now allowed to choose any one of the pension funds including Private sector pension funds. They can change their option once in a year. 

However, the current provision of a combination of the Public-Sector Pension Funds will be available as the default option for both existing as well as new Government subscribers.

Central government employees will also get the following investment choices:

1. Government employees who prefer a fixed return with a minimum amount of risk may be given an option to invest 100% of the funds in Government securities (Scheme G).

2. Government employees who prefer higher returns may be given the options of the following two Life Cycle based schemes.

3. Conservative Life Cycle Fund with maximum exposure to equity capped at 25% at the age of 35 years and tapering off thereafter (LC-25).

3. Moderate Life Cycle Fund with maximum exposure to equity capped at 50% at the age of 35 years and tapering off thereafter (LC-50).

In case an employee does not submit any choice, the existing allocation of funds shall continue as the default option.


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