How to Close NPS Account?

Different Types of NPS Accounts

NPS accounts are mainly of two different types, Individual NPS account or the All Citizens Model and Corporate NPS accounts.

All Citizen Model: This account type is available for all Indian Citizens to get fixed returns on income in addition to securing regular income post-retirement. Citizens aged 18 to 70 are eligible to open this account.

In an individual NPS account, the account holder is the sole contributor. The subscriber also has total liberty to pick an investment plan, scheme, service provider, and fund manager.

Corporate Model: In the corporate NPS account, the employer can contribute to the subscriber’s account along with the account holder. The employer, however, has to register for corporate NPS for the tax benefit of the employees.

Irrespective of the model, there is an option to open two sub-accounts under the same Permanent Retirement Account Number (PRAN).

Tier 1 account: This account is the primary account. It becomes functional by default when an individual becomes a subscriber to NPS. It is also known as the pension account and offers a plethora of tax benefits. Withdrawals from this account are permissible only under specific circumstances, known as partial withdrawal.

The minimum contribution required at the time of opening a Tier 1 account is Rs 500/. A subsequent contribution of Rs 500/- and a minimum contribution of Rs 1000/- per annum is necessary to keep the account functional.

Tier 2 account: Opening a Tier 2 account is possible only after the Tier 1 account is active. It also requires an additional application. The account holder can invest an additional amount in the Tier 2 account.

The subscriber is also free to withdraw the accumulated corpus from this account at any point in time. Tier 2 accounts offer no tax benefits, and funds transfer from Tier 1 account to Tier 2 account is not allowed.
The minimum contribution required at the time of opening a Tier 2 account is Rs 1000/. A subsequent contribution of Rs 250/- is necessary to keep the account functional.

What are the Different Choices When the NPS is Due for the Exit?

When the subscriber reaches the age of 60 and is set for retirement, the following options are available:

Continuation of the NPS account

Deferment

Exit the NPS account

Continuation of the NPS

You can choose to continue the NPS account and avail of benefits up to the age of 70. It entails all the facilities and privileges of a standard NPS account like access to CRA, liberty to switch fund managers, etc.

Follow these steps to file a continuation request:

Access the CRA system using your User ID (PRAN) and Password.
Click on ‘Exit from NPS.’
Pick the ‘Request for Deferment’ option.
Enter the necessary details and submit the ‘Continuation’ request.
Get the request authorized by the necessary authorities.

You can also approach your Nodal Officer/PoP and submit a physical request. File the request for continuation 15 days before the attainment of retirement age. If you miss this deadline, you will have to obtain approval from NPS trust and submit a request to CRA.

People also calculate: NPS Calculator

Deferment

You can defer the withdrawal yet stay invested in NPS up to the age of 70. The following choices are offered under the NPS:

Defer only annuity.
Defer only Lumpsum withdrawal. Withdrawal of the lumpsum amount over 10 years is permissible in a systematic manner or all at once.
Defer both the Lump-sum corpus and annuity receipt.

To file a deferment request:

Access the CRA system using your User ID (PRAN) and Password.
Click on ‘Exit from NPS.’
Pick the ‘Request for Deferment’ option.
Enter the necessary details and submit the ‘Deferment’ request.

Just like in the case of filing a continuation request, you can approach the Nodal Officer/PoP. The same deadline is applicable for the deferment request as well.

Exiting the NPS

If a subscriber does not wish to opt for any of the options mentioned above, he/she can choose to exit the NPS. Here, you might wonder how to close NPS account?

For closing your NPS account, please ensure that you update details such as PAN, address proof, bank details, nomination, etc., in your NPS account before commencing the withdrawal process.

The steps to exit the NPS are as follows:

Log in to the CRA system using your User ID (PRAN) and Password.
Click on ‘Exit from NPS.’
Click on the ‘Initiate Withdrawal Request’ option.
Enter the details like choice of annuity service provider and annuity scheme.
Print the form after the successful submission of details.
Fill the required details in the form and submit it along with KYC documents to the respective Nodal Officer or PoP.
The authorities will verify the details and grant the sanction online in the CRA.

If you cannot raise the request online, fill the form and submit it to the relevant officer who will initiate the process for you.

In Conclusion

The NPS is a highly efficient post-retirement plan for Indian Citizens. The structural composition and the technical aspects of the accounts under NPS are thorough and offer various benefits.

It is possible to carry out tasks such as account handling, fund transfers, opening and closing the account online or physically at the respective office. This ease of management makes the NPS a convenient option for investors from various sectors.