NPS Exit Rules 2025: Now it has become easy to withdraw money in NPS. The lock-in of 5 years has been abolished. It has become even easier to withdraw the entire amount on a smaller corpus. Know what are the new exit rules and who will benefit by how much…
NPS Withdrawal Rules 2025: The Pension Fund Regulatory and Development Authority (PFRDA) has made a big and relief announcement regarding the National Pension System (NPS) on 16 December. These changes have been made especially for non-government sector subscribers, so that people can get more control over their money, better liquidity and more flexibility at the time of retirement. Exit and withdrawal rules under the Common Schemes (CS) and Multiple Scheme Framework (MSF) have been made easier than ever. This amendment is extremely important for millions of private sector employees, self-employed professionals and business owners who consider NPS as a strong foundation for their retirement plans.
Exit from NPS is now more beneficial than ever
Till now, non-government subscribers of NPS were allowed to withdraw only a maximum of 60% of their corpus as lump sum at the time of retirement, while it was mandatory to buy annuity with at least 40% of the amount. But the new rules have completely changed this equation. Under the revised structure, if the total pension corpus of a subscriber is more than Rs 12 lakh, now only 20% of the amount will have to be invested in annuity and 80% of the amount can be withdrawn as lumpsum. This change is going to make financial planning after retirement easier and according to personal needs.
Big relief even for those with small corpus
In the new rules of PFRDA, special relief has also been given for those having small pension balance. If the total NPS corpus of a subscriber is up to Rs 8 lakh, he can withdraw the entire amount in 100% lump sum without any conditions. At the same time, those whose corpus is more than Rs 8 lakh and up to Rs 12 lakh will also get big benefits. In such cases, an amount up to Rs 6 lakh can be withdrawn immediately as a lump sum, while the remaining amount will have to be invested in an annuity for at least 6 years. This will neither lock up the entire money nor put pressure on retirement income.
Facility to remain in NPS for 85 years
Another big factor of this amendment is the increase in entry and exit ages. Now any non-government subscriber can continue investing in NPS till the age of 85 years, unless he himself chooses the exit option. Earlier this limit was quite low, which caused problems to those retiring late or working for long hours. Normal Exit can now be taken after completion of 15 years of subscription or at the age of 60 years, superannuation or retirement, whichever is earlier.
5 year lock-in period ends
Another big relief for non-government NPS subscribers is that the mandatory lock-in period of 5 years has been removed. This means that now people will be able to plan their money in a more flexible manner when needed. This move makes NPS more attractive than other retirement products. However, this relaxation will not apply to government employees. Like before, 5 years lock-in will be mandatory for them.
What are the rules for government employees?
NPS rules will remain different for government employees. On normal exit at the age of 60 years, if the total corpus is less than Rs 5 lakh, 100% of the amount can be withdrawn as lumpsum. But if the corpus is more than Rs 5 lakh, then at least 40% of the amount will have to be invested in annuity and the remaining amount can be received in lump sum.
Premature Exit and Special Circumstances
If a subscriber exits NPS prematurely, normally at least 80% of the corpus will have to be invested in annuity and a maximum of 20% will be given as lump sum. But if the total pension balance is less than Rs 5 lakh, the entire amount can be withdrawn in lump sum. Exit option is also available for physically disabled or more than 75% disabled subscribers. They will have to get a medical certificate made from a government doctor or surgeon.
What will happen in case of death, loss of citizenship and missing case?
If the subscriber dies before purchasing the annuity or making lumpsum withdrawal, the entire accumulated pension amount will be passed on to the nominee or legal heir. In case of Renunciation of Citizenship, the subscriber can close his NPS account and withdraw the entire amount in lump sum. If a subscriber is missing and is presumed dead by law, the first 20% amount will be given to the nominee as interim relief and the remaining amount will be released after completion of the process under Bharatiya Sakshya Adhiniyam, 2023.