NPS new rule: 'Penny drop' verification now mandatory for fund withdrawal

The Pension Fund Regulatory and Development Authority (PFRDA) has introduced a new 'penny drop' verification process to make it easier for subscribers of the National Pension System (NPS) to access their funds. This move is aimed at ensuring the smooth and timely transfer of money.

Well, it's a way for Central Recordkeeping Agencies (CRAs) to check the status of your savings bank account. They confirm that your bank account's name matches the name in your Permanent Retirement Account Number (PRAN) or the documents you've submitted. This new rule applies to NPS, Atal Pension Yojana (APY), and NPS Lite for various situations, including withdrawals, modifications to your bank account details, and more.

To make sure your bank account is valid and active, they conduct a 'test transaction' by depositing a small amount into your account and checking if the name matches. In simple terms, your bank account needs to pass this 'penny drop' check for any withdrawal request to go through or for changes to your account details.

The PFRDA has made it clear that if the 'penny drop' verification doesn't succeed, your request for withdrawal or changes to your bank account details won't be approved. In such cases, the CRAs will work with the necessary offices to help you fix your bank account details through a defined process.

Additionally, the PFRDA will inform subscribers about any 'penny drop' failures via mobile messages and emails, guiding them on the steps to take.

The regulator has given CRAs a month to implement this 'penny drop' verification system. This new measure is designed to prevent situations where subscribers' funds couldn't be transferred to their bank accounts due to incorrect details. It ensures a smoother and more reliable process for accessing your pension savings.

The National Pension System, or NPS, is a government-run investment scheme that allows subscribers to allocate their investments across various asset classes. It gives the subscriber the option to set the preferred allocation to different asset classes. The subscriber can either apply for an NPS account by visiting a Point of Presence (PoP) or do it online through the e-NPS website.