National Pension System (NPS), is one of the fastest growing provident funds in India, which offers portability, flexibility, multiple convenient modes of depositing contributions, choice of pension funds, scheme preference, exclusive tax benefits, etc. The features of this pension fund address the new-age issues.
In this pension system, there is a Permanent Retirement Account Number (PRAN), which is distinctive. Thus, this active PRAN can be used by a subscriber while opening a new NPS Account after closing their existing NPS Account.
Based on the feedback from the subscribers who have withdrawn their lump sum (20 per cent) but have not yet availed the annuity, but now those subscribers wish to continue, PFRDA introduced an option.
So, the new circular of PFRDA dated September 23, 2020, allows subscribers to continue the NPS account. What does it say:
-NPS subscribers — who have exited NPS prematurely or if their PRAN has been deactivated due to final exit — can open a new NPS account with a new PRAN if an individual is eligible to join NPS.
-There is a one-time option for (prematurely exited) subscribers who wish to continue in NPS with the same PRAN. The subscriber has to redeposit the amount withdrawn earlier (up to 20 per cent), into their NPS account (with the same PRAN). The subscriber has to deposit the amount in one lump sum. Thus, reactivating the account.
- If making a lump sum payment is difficult to avail of the one-time option, then the individual can opt to close their NPS account by availing annuity from the remaining corpus and open a new NPS account.
The option to redeposit the amount withdrawn earlier is an offer to preserve the legacy corpus and facilitate further accumulation in an uninterrupted manner.