Dear Sir, I have approx Rs 2.5 lacs in NPS which was contributes over approx 4 Years. Now I have moved to Germany for the last 2 years. Can I withdraw the whole amount and how? Thanks!

Ans: It can be applied online through to your last employer

Ans: At 42, you cannot withdraw the full amount from NPS.

You can only withdraw up to 20% before 60.

The remaining 80% must be used to purchase an annuity.

Consider staying in NPS for tax benefits.

For better returns, switch to aggressive funds within NPS.

Benefits of Staying in NPS

NPS offers tax benefits under Section 80C and 80CCD.

It provides disciplined retirement savings.

You can switch between fund managers.

NPS has low fund management charges.

Disadvantages of Index Funds

Index funds only track market indices.

They lack flexibility to outperform the market.

Actively managed funds seek higher returns.

Professional fund managers make strategic decisions.

Actively managed funds adapt to market changes.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in

Ans: Since you have contributed to this scheme for more than 3 years, You can partially withdraw the amount, for some specific purpose.
Most welcome for any further clarifications. Thanks.

Ans: You have Rs 15 lakhs as your corpus and intend to withdraw Rs 10,000 per month. Your NPS fund is generating a return of 15%. Let us analyse if this plan is sustainable.

SWP in NPS
The NPS provides flexibility in managing your corpus post-retirement. However, it has specific withdrawal rules:

You can withdraw up to 60% of the total corpus as a lump sum.
The remaining 40% must be used for annuity purchase.
If this withdrawal is planned pre-retirement, restrictions may apply.
Can You Sustain Rs 10,000 Withdrawal Monthly?
1. Initial Assessment
Rs 10,000 monthly equals Rs 1.2 lakhs annually.
This represents an 8% withdrawal rate from your Rs 15 lakhs corpus.
At 15% annual returns, the remaining corpus can grow even after withdrawals.
2. Sustainability of Corpus
High withdrawal rates can deplete the corpus during market downturns.
A withdrawal rate of 4-6% is generally safer for long-term sustainability.
3. Impact of Fluctuating Returns
The current 15% return may not remain consistent.
Lower returns in the future can affect the corpus’s longevity.
Steps to Ensure Sustainable Withdrawals
1. Reallocate Corpus Wisely
Use a mix of equity and debt investments to balance growth and safety.
Allocate funds to equity for growth and debt for stability.
2. Use a Conservative SWP Strategy
Start with a lower withdrawal amount.
Gradually increase withdrawals to match inflation and needs.
3. Monitor Performance Regularly
Review your portfolio performance every six months.
Adjust withdrawal amounts based on returns and market conditions.
Taxation Considerations
Withdrawals from NPS are taxable as per your income tax slab.
Ensure that the tax burden does not reduce your effective monthly income.
Alternatives to Consider
1. Hybrid Mutual Funds
These funds offer a mix of equity and debt for balanced growth.
Use SWP from these funds for steady income and reduced risk.
2. Debt Funds for Stability
Short-term and ultra-short-term debt funds provide regular income.
These funds are ideal for maintaining liquidity and stability.
3. Equity for Long-Term Growth
Retain a portion of your corpus in equity for inflation-beating returns.
Diversify with flexi-cap and large-cap funds for stability.
Final Insights
Withdrawing Rs 10,000 monthly is possible but requires careful planning. A lower withdrawal rate can ensure corpus longevity. Diversify your corpus between equity and debt for optimal growth and stability. Regular reviews and tax-efficient withdrawals can sustain your income needs.

Best Regards,

K. Ramalingam, MBA, CFP,

Chief Financial Planner,

www.holisticinvestment.in
https://www.youtube.com/@HolisticInvestment