New NPS exit rules notified: PFRDA allows 80% withdrawal, 100% up to ₹8 lakh; all details here

PFRDA has notified 'The Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025', reducing the cap on mandatory annuity purchase to 20% of the total corpus for non-government subscribers, subject to certain conditions.

The new rules allow non-government subscribers to make a mandatory purchase of an annuity plan with only 20% of their accumulated pension wealth. But this is subject to the following conditions:

• They should have completed minimum 15 years under NPS; or,

• They should have completed 60 years of age; or,

• They should have superannuated or retired from employment

The balance 80% of the corpus can be withdrawn as a lump sum or through systematic lump sum withdrawal or systematic unit redemption. In some cases, up to 100% withdrawal is also allowed (See below).

Earlier, non-government subscribers had to mandatorily purchase an annuity with a minimum of 40% of their pension wealth.

Full withdrawal up to ₹8 lakh

Subscribers will not be required to purchase any annuity if the total accumulated pension wealth is not more than ₹8 lakh. Such amount can be withdrawn as a lump sum or through systematic withdrawal.

In case the amount is above ₹8 lakh but less than ₹12 then, then the subscriber will have the option to withdraw up to ₹6 lakh as lump sum or avail periodic payouts, and the balance of the accumulated pension wealth can be availed as periodic payouts in the form of systematic unit redemption for at least six years or annuity or other options as may be approved by the Authority.

No relief in case of early exit

There is no relief for those planning to exit early from NPS. As per the notification, subscribers will have to use 80% of the accumulated pension wealth to buy an annuity plan if they exit before,

• Completing 15 years under NPS; or,

• attaining the age of 60 years, or,

• superannuation or retirement as per the terms and conditions of the subscriber's employment

However, if the accumulated pension wealth is equal to or less than ₹5 lakh, then entire amount can be withdrawn as lump sum or as periodic payouts.

Defer annuity purchase till age 85

Non-government subscribers will be allowed to defer purchase of annuity or withdrawal of lump sum amount till the age of 85 by submitting a request to National Pension System Trust or any intermediary or entity authorised by PFRDA. However, they will be allowed to exit at any time.

Option for those joining NPS after 60 years

In case of an individual subscribing to the NPS on or after attaining the age of 60 years but before 85 years, at least 20% of the accumulated pension wealth of such subscriber shall be mandatorily utilised for purchase of annuity and the balance of the accumulated pension wealth shall be paid in lump sum or through periodic payouts.

If the accumulated pension wealth of the subscriber is equal to or less than ₹12 lakh then the subscriber will have the option to withdraw the entire accumulated pension wealth in lump sum or avail periodic payouts in the form of systematic lump sum withdrawal or systematic unit redemption.

What's new for government subscribers?