PFRDA revises NPS equity cap and withdrawal norms

If you are a subscriber to the National Pension System (NPS), there is some good news for you. The Pension Fund Regulatory and Development Authority (PFRDA) has increased the cap on equity investment for private sector subscribers under ‘active’ choice from the current 50% to 75%. Though the increase in equity cap comes with a clause of tapering of equity allocation after 50 years of age, those below the age of 50 years can avail the full benefit of 75% equity allocation if they so desire. The increase in the cap on equity will enable NPS subscribers to allocate 75% of their subscription towards equity investment, which will help them maximise the returns on their investment as equity as an asset class has outperformed all other asset classes over the long term.

Another good news for NPS subscribers is that the PFRDA board has approved amendment in partial withdrawal rules of NPS. According to this amendment, NPS subscriber will now be also allowed to make partial withdrawals for the purpose of higher education or acquiring professional qualifications or new technical skills or upgrading the skills. This will help improve the employability of the NPS subscriber. Moreover, the NPS subscriber can now also make partial withdrawals for the purpose of setting up a new business or for acquiring a new business. This facility of withdrawal for setting up new business or expanding the existing business through acquisition is expected topromote entrepreneurship development among NPS subscribers. Excepting the above, all other terms of partial withdrawal remain unchanged.