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NISM Certifications · NISM-Series-X-B: Investment Adviser (Level 2) · Retirement Products

Mr. Rao, aged 40, is an NPS Tier I subscriber under the All Citizens model. Which statement about the Tier I account is correct under the PFRDA exit rules for non-government subscribers?

For a non-government NPS subscriber exiting normally, at least 40% of the corpus must be used to buy an annuity from an empanelled insurer, and the remaining up to 60% may be taken as a lump sum. Full withdrawal or 100% compulsory annuitisation is not the rule.

  1. AAt exit on superannuation, at least 40% of the corpus must be used to buy an annuity, and the balance can be taken as lump sumCorrect
  2. BThe entire corpus can be withdrawn tax-free at any time without buying an annuity
  3. CAt exit, 100% of the corpus must be used to buy an annuity
  4. DAt exit, only 20% can be used to buy an annuity and the rest must stay invested forever

Explanation

Under the PFRDA exit regulations for non-government subscribers, at normal exit at least 40% of the accumulated corpus must be used to purchase an annuity, and the remaining up to 60% can be withdrawn as lump sum. Full withdrawal at will is not permitted from Tier I, and 100% annuitisation is not mandatory.

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