The National Pension Scheme (NPS), a voluntary defined contribution pension system in India, allows investors to exit from the scheme before maturity after completing 10 years in the scheme.

However, in this case, at least 80 per cent of the accumulated pension wealth needs to be utilised for purchase of an annuity from an annuity service provider; and only the balance (up to 20 per cent) is paid out as lumpsum.

According to the pension fund regulator - PFRDA (Pension Fund Regulatory and Development Authority) - there have been requests from subscribers, who have withdrawn their lumpsum but have not yet availed of the annuity, and subsequently decided to continue the NPS Account.

Options before subscribers

These subscribers now have the following options. One, open a new NPS account with new a PRAN (Permanent Retirement Account Number) after closing their existing NPS account; PRAN is unique, and the subscribers can have one active PRAN at any given point of time.

Two, continue in the NPS with the same PRAN by redepositing the amount withdrawn earlier (up to 20 per cent) into their NPS account.

The latter option allows subscribers who have partially exited the scheme (and desire to continue with NPS) to redeposit the amount withdrawn and continue with the same account, allowing them to accumulate further in an uninterrupted manner.

Note that the option to redeposit in order to continue the existing PRAN can be availed of only once and the money needs to be deposited in one lumpsum.

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