National Pension System: Know How Will the New NPS Rule Benefit Subscribers.

In recent developments, the National Pension System (NPS) has introduced a significant change in its withdrawal rules aimed at providing added flexibility and financial security to its subscribers. The Pension Fund Regulatory and Development Authority (PFRDA) has unveiled a feature known as Systematic Lump Sum Withdrawal (SLW) that allows NPS subscribers to withdraw a portion of their pension corpus periodically. This strategic move is set to enhance the post-retirement financial well-being of retirees.

NPS New Pension Scheme: Key Highlights

  1. NPS introduces a revolutionary Systematic Lump Sum Withdrawal (SLW) option for subscribers.
  2. SLW enhances post-retirement financial well-being with flexible periodic cash flows.
  3. Retirees aged 60 to 75 can allocate 40% of their corpus for an annuity while using SLW for the rest.
  4. The SLW option benefits those seeking consistent income streams during retirement.
  5. NPS subscribers can choose SLW to secure financial stability and cover regular expenses.
  6. ‘Penny drop’ verification ensures secure and efficient fund transfers for NPS subscribers.

Understanding Systematic Lump Sum Withdrawal (SLW)

The Systematic Lump Sum Withdrawal (SLW) facility introduced in the NPS is akin to the Systematic Withdrawal Plan (SWP) found in mutual funds. With SLW, NPS subscribers can systematically withdraw a desired amount at regular intervals, offering them a reliable source of income post-retirement.

Upon reaching the age of 60 and up to 75, subscribers must allocate a minimum of 40% of their corpus to purchase an annuity. An annuity, in this context, provides periodic payments based on the terms chosen. The remaining corpus can be withdrawn as a lump sum or systematically through the SLW method. This innovative approach allows retirees to receive periodic cash flows, effectively enhancing their post-retirement income and helping them cover regular expenses. Subscribers have the freedom to select this withdrawal method once, and payments will align with their preferences, ensuring financial stability during retirement.

Who Benefits from the SLW Option?

The SLW option is particularly advantageous for retirees looking to secure a steady income stream during their retirement years. It becomes available when a subscriber decides to retire and applies to the lump sum NPS corpus after purchasing the annuity. This feature offers peace of mind and financial security, as retirees can count on regular payments to cover their expenses.

How Does NPS Work?

The National Pension System (NPS) is a government-sponsored program regulated by the Pension Fund Regulatory and Development Authority (PFRDA). NPS subscribers make investments in the capital market, including equities, government securities, corporate bonds, and alternative assets, based on their risk appetite. This investment strategy is designed to build a substantial retirement corpus over time.

To ensure the smooth and timely transfer of funds, the pension regulator has made ‘penny drop’ verification mandatory for NPS subscribers’ fund withdrawals. This recent initiative further strengthens the security and efficiency of the NPS system.


The new NPS rule introducing the Systematic Lump Sum Withdrawal (SLW) facility is a game-changer for retirees, providing them with a dependable income source during their golden years. It offers flexibility and peace of mind, allowing retirees to maintain their financial stability while covering their regular expenses. The National Pension System (NPS) continues to evolve, ensuring a secure and promising future for its subscribers.



Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.