Rule 19 — NPS Rules
Original Rule Text
19. VRS/PMR/Resignation. In case of retirement on completion of 20 years of service i.e. in case of voluntary retirement and in case of Premature Retirement under FR(56)j, the subscriber will be entitled for retirement benefits as admissibility under PFRDA (Exit and Withdrawals under NPS) Regulations, 2015 and may continue his individual pension account or to defer payments of benefits under NPS beyond the date of retirement. In case of resignation from govt. service, then, unless it is allowed to be withdrawn in public interest, she would be paid not more than 20% of the accumulated pension corpus and the balance 80% is be invested for buying the annuity
Frequently Asked Questions on NPS
What This Means
When an employee opts for Voluntary Retirement (after 20 years of service) or Premature Retirement under FR 56(j), they are entitled to full NPS retirement benefits as per PFRDA Regulations, 2015. They may also choose to continue managing their individual pension account themselves or defer drawing the NPS benefits beyond their retirement date.
However, if an employee resigns from government service, the situation is very different. Unless the resignation is withdrawn in the public interest (meaning the government decides to retain the employee), the resigned employee receives only a maximum of 20% of the accumulated pension corpus as a lump sum. The remaining 80% is compulsorily used to buy an annuity. This stricter treatment for resignation — compared to voluntary retirement — is designed to discourage employees from leaving prematurely while still providing some retirement protection.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Voluntary retirement (20+ years of service) and Premature Retirement (FR 56j): entitled to full PFRDA exit benefits.
- 2These employees can continue managing the PRAN individually or defer NPS benefit payments.
- 3Resignation (not in public interest): only up to 20% of corpus as lump sum.
- 4On resignation, remaining 80% is compulsorily invested in an annuity.
- 5Resignation withdrawn in public interest: treated as continued service, normal NPS rules apply.
Practical Example
Rina Gupta decides to take Voluntary Retirement after 22 years of service. She applies under the normal VRS process. Upon retirement, her NPS corpus of Rs 60 lakh is treated like superannuation: she can withdraw Rs 36 lakh (60%) as a lump sum and use Rs 24 lakh (40%) to purchase an annuity. She can also elect to defer the withdrawal and let the corpus keep growing.
Her colleague Shyam, however, simply resigns to join a private sector firm after 8 years. Since it is a straight resignation, he gets only 20% of his Rs 20 lakh corpus — Rs 4 lakh — as cash. The remaining Rs 16 lakh (80%) must be used to buy an annuity, ensuring he still has some monthly income in old age.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
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This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.