NPS Exit Rule 2025: The Pension Fund Regulatory and Development Authority has made several important and critical changes in exits and withdrawals under the National Pension System (NPS). These changes will
transform NPS into a better and more effective retirement scheme, removing barriers and hurdles to the subscriber while withdrawing their hard-earned money.
From Higher Lump Sum To Loan Facility: How PFRDA Has Made NPS More Subscriber-Friendly
1. Flexibility In Exit & Withdrawals
One of the important changes in the NPS is offering more flexibility in exit and withdrawal rules, with a clearly defined procedure for each individual pension account, not just the Permanent Retirement Account.
It means if a person has different NPS accounts, every exit will be handled separately for each account.
2. Deferment Option Expanded
If a retiree doesn’t want to withdraw lump sum amount or annuity purchase at 60, then he/she can defer them up to the age of 75 years. But they have the flexibility to choose exit whenever they wish to do.
3. Higher Lump Sum Limits At Exit
The regulator has decreased the minimum annuity requirement for non-government employees to 20 per cent for the corpus above Rs 12 lakh. Which means that they can take 80 per cent lump sum at their retirement.
If an employee has a corpus less than Rs 8 lakh at the time of superannuation or retirement, then it is allowed to take 100 per cent lump sum. For the corpus in the range of Rs 8 to 12, Rs 6 lakh lump sum.
For government employees having corpus of Rs 12 lakh or above, there’s an annuity requirement of 40 per cent with 60 per cent lump sum allowed.
4. Partial withdrawal rules simplified
PFRDA has simplified partial withdrawal rules with a cap at 25 per cent of own contribution. Subscribers can use partial withdrawals to fund house purchase or construction, medical treatment (self, spouse, children, and parent), and repayment of loans taken against NPS.
Subscribers are allowed to withdraw a maximum 4 times before the age of 60 in the gap of 4 years. Post 60, they are allowed to withdraw with 3-year gap without any maximum limit.
5. Clear Rules For Missing Subscribers
If a subscriber has gone missing or presumed dead, then 20 per cent of corpus can be paid as interim relief. The rest of corpus will be paid after the legal confirmation under Bharatiya Sakshya Adhiniyam, 2023.
6. Rules On Exit On Loss Of Indian Citizenship
If an NPS subscriber loses its Indian citizenship status, they are allowed to close NPS account and withdraw entire accumulated pension wealth.
7. Loan Against NPS Formally Recognised
Under the new notification, NPS subscribers can now take loans from regulated financial institutions, with the account marking as charge/line for such loans, within limits set by PFRDA.
8. Uniform Treatment Of Nominees & Legal Heirs
PFRDA has tried to uniform the treatment of nominees and legal heirs in the new update by replacing family members with “nominee (s) or legal heir (s)”. This is made to avoid dispute and bring clarity during claim settlement.
9. NPS-Lite Withdrawal Limit Increased
PFRDA has raised NPS-Lite full withdrawal limit from Rs 1 lakh to Rs 2 lakh.
10. Single Consolidated Framework
The amendment aims to consolidate and replace multiple earlier circulars.
Exit benefits are now clearly tabulated separately for:
Government sector
Non-government sector
NPS-Lite / Swavalamban
