Pension Fund Regulatory and Development Authority
The rules for withdrawing money from the National Pension System (NPS) have now become more flexible and easier than before. Pension Fund Regulatory and Development Authority (PFRDA) has made important changes in the exit and withdrawal rules. The new rules have come into effect this year 2026. Under these new rules, government and corporate employees get many options to withdraw money before and after retirement. Now, not only is there a facility to withdraw more cash, but the rules for purchasing annuity for pension have also been changed in some cases, which will give investors the opportunity for better planning.
Now the rules of exit and withdrawal have become more flexible for NPS subscribers. Under the new rules of PFRDA, the maximum investment age for government employees has been increased from 75 to 85 years, although they can exit even earlier if they wish. On retirement, they can withdraw up to 60% of their total corpus as cash, while it will be mandatory to buy annuity from 40% amount, which will provide regular pension.
Relief to corporate employees
At the same time, corporate sector employees have got great relief. Now the lock-in of 5 years has been abolished and the vesting period has been reduced to 15 years or 60 years. The biggest change is that now they can withdraw up to 80% of the amount in lump sum on retirement and it will be necessary to take annuity from only 20%.
New options have also been given on the basis of corpus. If the total amount is less than Rs 8 lakh then the entire money can be withdrawn at once. If the amount is between Rs 8 to 12 lakh, up to Rs 6 lakh can be taken as lump sum and the remaining amount can be taken in systematic unit redemption or annuity. If it is more than Rs 12 lakh, 80/20 rule will be applicable. In case of premature exit, government employees will have to purchase annuity with 80% of the amount, while corporate employees are allowed to withdraw only 20% of the cash. However, on corpus up to ₹ 5 lakh, investors from both sectors can withdraw the entire money in lump sum.
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