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National Pension Scheme (NPS) which is a defined contributory savings scheme was introduced by the government with an intention to provide retirement solutions for Indian citizens.

Under the NPS there are two types of accounts – Tier I (pension account) and Tier II (investment account).

  • Tier I is the a mandatory account which allows limited withdrawal options until the person reaches the age of 60.
  • Tier II which is a voluntary savings/investment account is more flexible and allows the subscribers to withdraw as and when they wish without any restrictions.

In Jan 2018, the PFRDA (NPS regulator) relaxed the withdrawal norms and allowed the subscribers to withdraw up to 25% of the balance after the completion of 3 years. The purpose of withdrawal included treatment of specified illness of a family member, education of children, wedding expenses of children and purchase or construction of house.

Partial withdrawals – some more options now

The PFRDA has recently added two more events under which partial withdrawal from the NPS can be made before retirement. They are as follows:

  • Partial withdrawal towards meeting the expenses pertaining to employee’s self- development/ skill development/ re- skillingwill be allowed. This includes gaining higher education or professional qualification for which the employee might require in and out of India. However, if such activities on request of the employee are sponsored by the employer then these will not be considered as a class for withdrawal as in such cases the employer bears all the expenses.
  • Partial withdrawal towards meeting the expenses for the establishment of own venture or a start upshall be permitted. However, if an employer-employee relationship exists, then in that case the partial withdrawal will not be applicable.

There are certain limitations to the partial withdrawal clause which remain unchanged:

  • The subscriber should have been a member of NPS for a period of at least 3 years from the date of joining.
  • The subscriber shall be permitted to withdraw accumulations not exceeding 25% of the contributions made by him or her, standing in his/her credit in his or her individual pension account as on the date of application from the withdrawal without considering any returns thereon.

For instance, if you have Rs. 2 lakhs in your account out of which Rs 1 lakh was contributed by you and Rs 1 Lakh was contributed by your employer, then you will be able to withdraw only Rs. 25000 or 25% of your contributions.

  • The frequency of total partial withdrawals shall remain unchanged i.e. the subscriber shall be allowed to withdraw a maximum of 3 times throughout the entire tenure of the subscription of the NPS. For the withdrawal, the subscriber must make a request to the central record keeping agency or the Nodal office.


Adding equities to your retirement corpus

In addition to adding more withdrawal options, there have also been increases in the allowed equity percentage to the retirement corpus. The percentage of equity assets that a subscriber can choose under active choice have been increased. The percentage of equity assets allowed has been increased to 75% from 50% (applicable for non government employees).

All in all the PFRDA is trying to make the NPS more attractive as a retirement solution. Depending on your age, time horizon, risk profile and current retirement corpus investments, the NPS could still prove as one of the avenues that you could consider using for building a retirement corpus.

 

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In a landmark judgement, the Supreme Court on Friday recognized that a terminally-ill patient or a person in persistent vegetative state can execute an “advance medical directive” or a “living will” to refuse medical treatment, saying the right to live with dignity also includes “smoothening” the process of dying.

What is a Living Will?

It is essentially a document that sets out a patient’s wishes regarding how they want to be treated if they are seriously ill or in a permanently vegetative state. With this judgment, the right to die with dignity has been recognized as a fundamental right.

As regards personal finances, perhaps a big critical function that a living will performs is that it allows the maker of the will to prevent their family from financially overburdening themselves, sometimes to the extent of bankruptcy. Usually family members are spurred on out of love, guilt or a sense of duty to keep the patient alive, often at any cost. This results in the family’s financials going into disarray and jeopardizing their financial future and important life goals.

Who qualifies to write down a Living Will?

  • An adult who is of a sound and healthy mind and in a position to communicate, relate and comprehend the purpose and consequences of executing the document.
  • An adult must make such a will voluntarily 

What are the important items to cover in the document?

The judiciary has laid down guidelines on how such a document can be formed. They are as follows:

  • It should clearly indicate the decision relating to the circumstances in which medical treatment can be withdrawn.
  • Instructions must be absolutely clear and unambiguous.
  • It should mention whether the patient would like torevoke the instructions/authority at any time.
  • It should specifythat the patient has understood the consequences of executing such a document.
  • It should specify the name of a guardian or close relative who, in the event of the patient becoming incapable of taking decision at the relevant time, will be authorized to give consent to refuse or withdraw medical treatment
  • It should be in writing and should clearly state as to when medical treatment may be withdrawn or if specific medical treatment that will have the effect of delaying the process of death should be given.
  • If there is more than one valid Advance Directive, the most recently signed Advance Directive will be considered as the last expression of the patient‘s wishes and will be implemented.

How should this document be stored? 

The Supreme court has further laid down a road map on how the Living Will needs to be stored safely:

  • The living will should be signed by the maker in the presence of two witnesses. It should be countersigned by the judicial magistrate of first class (JMFC), confirming that the will has been drawn up voluntarily.
  • The JMFC will maintain a copy of the will and forward a copy to the registry of the district court of that jurisdiction.

Implementation of a Living Will 

The Supreme Court has described various checks on how a living will may be implemented:

  • Execution of the will can only be done if the medical board approves it. The medical board will consist of the head of the treating department and at least three experts from various specialized medical fields with at least 20 years of experience. The board can only give their certification (or not) in presence of the closest relatives. Furthermore, the board’s certification is only preliminary.
  • Once the board approves, the hospital has to inform the jurisdictional collector of the same. The collector will then appoint a separate board consisting of the Chief District Medical Office and three other experts from specialized medical fields. If this board approves the same, the chief medical officer will relay the decision to the jurisdictional magistrate who will then have to visit the patient at the earliest and authorize the implementation.

Any advantages of a Living Will?

  • Providesrespect towards a human being’s fundamental right to live and die smoothly
  • Doctors are likely to suggest appropriate procedures and medication knowing what the patient wantsas per his living will
  • A living willspares both the doctor and immediate relatives from taking difficult decisions
  • A living will could also spare the immediate family from the financial burden that comes up in cases of unnecessarilyprolonged medical procedures for a terminally ill family member

While Living Wills are common in the west, it is a very new concept in India. Although the general verdict, by and large is that this is a positive step in the right direction the complexity is still something that needs to be addressed.

 

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