All citizens of the country can now buy a pension plan at retirement age with the pension regulator increasing the maximum age for entering the new pension scheme (NPS) from 55 years to 60 years.
The decision was taken at the last board meeting of the Pension Fund Regulatory Development Authority (PFRDA). NPS, earlier restricted to government employees, was opened to all citizens up to 55 years of age on May 1. The regulator decided to increase the maximum age after many people nearing their retirement age showed interest in joining the scheme.
The minimum age is 18 years. One can stay invested up to the age of 70 years. Anybody who joins NPS cannot withdraw his savings before the age of 60. This means those joining the scheme at the age of 60 will have the choice to stay invested for another 10 years.
“Technically, they can withdraw even at the age of 60, but by then they would not have any substantial savings. Moreover, people can use the Tier-II account (to be operational from December 1) from which they are allowed to withdraw their investments as and when required,” said a PFRDA official.
NPS subscribers will be allowed to withdraw 60 per cent of their savings as a lumpsum at the time of retirement. But they have to use the balance to buy an annuity scheme from a life insurance company of their choice. If they choose to withdraw before 60 years of age, 80 per cent of the amount has to be used to buy an annuity scheme. The life insurance company will pay subscribers a monthly pension for the rest of their life.
