If you are a National Pension System subscriber, soon you may get to dip into the pot for a home loan and realise the dream of having ‘pension with a house’ on retirement.

The Pension Fund Regulatory & Development Authority (PFRDA) is toying with the idea of allowing NPS funds to be used to support home loan needs of subscribers, said RV Verma, Member, PFRDA.

The regulator feels an NPS subscriber should be allowed to use the NPS corpus either directly or as a collateral for financing the house. This will be an improvement over the current regime, where any premature withdrawal means diminishing of balance.

“We are preparing a discussion paper on ‘Housing for NPS Subscribers’. Rather than allowing NPS contributions to flow into the capital market or specified securities, the same could also be used for supporting home loan needs of NPS subscribers. This discussion paper is expected to be ready in a month,” Verma told told BusinessLine here.

Any move to allow pension funds to be used for financing a home is expected to “reduce homelessness” in the country and is in line with the government’s objective of ‘Housing for All by 2022’. This facility will be available across the entire NPS subscriber universe — both government employees and non-government individual subscribers.

A win-win

This idea of allowing NPS monies to fund home purchase could be a win-win for the government and subscribers. Besides pension and a house, subscribers will get fiscal benefits by way of tax breaks for contributing to the NPS corpus and also for repayment of housing loan principal and interest.

For the government, the benefit comes in terms of reduced allocation from the fisc towards house building advance, Verma said.

As on date, an NPS subscriber is allowed partial withdrawal — capped at 25 per cent of the contribution if he has been with the scheme for at least 10 years.

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