National Pension System,NPS : SLW is a method of withdrawing the entire NPS after purchasing the annuity, providing retirees with regular cash flow and enhancing their post-retirement income.
National Pension System: As part of the proposed changes in the National Pension System ‘NPS’ As per the withdrawal rules, the Pension Fund Regulatory and Development Authority (PFRDA) will periodically allow automatic withdrawal of funds from the pool of NPS subscribers. “As per Regulations 3 and 4 of the PFRDA (Transfer and Withdrawal under NPS) Regulations, 2015 and its amendments, it is proposed to provide facility for gradual withdrawal of lump sum amount through Single Withdrawal Scheme systematic times (SLW), “the” stated PFRDA in its circular dated October 27, 2023.
NPS subscribers are allowed to withdraw up to 60% of their pension funds, through SLW, monthly, quarterly, semi-annually or annually for a period of up to 75 years as per their choice at the time of exit from the status Normal.
What is SLW?
The SLW facility is similar to the systematic withdrawal plan (SWP) of mutual funds. Through the SLW facility, NPS subscribers can systematically withdraw the desired amount at regular intervals.
“From age 60 to age 75, subscribers must devote at least 40% of their assets to purchasing annuities. An annuity provides periodic payments based on its terms. The remaining data can be removed in aggregate or systematically using the SLW method. SLW allows retirees to receive regular cash flows, thereby enhancing their post-retirement income and covering their regular expenses. This withdrawal method can be selected only once and payouts will be as per the subscriber’s preferences, said Kurian Jose, CEO, Tata Pension Management.
NPS: Who benefits from the SLW option?
According to Kurian Jose, SLW is an attractive option for retirees looking for a steady source of income during their retirement years. It can be claimed at the time of retirement of the subscriber and is applied to the NPS pool after purchasing the annuity.
How does NPS work?
NPS is a program sponsored by the Government of India and managed by PFRDA. An NPS subscriber invests in capital markets (equities, government securities, corporate bonds and alternative assets) based on his respective risk appetite to build his retirement fund.
Meanwhile, to ensure timely remittance, the pension regulator has made it mandatory to verify rebates on withdrawals by NPS subscribers, PFRDA informed in its circular dated October 25.
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