PFRDA eases NPS exit rules for non-government subscribers, lowers mandatory annuity to 20%

Non-government employees who have opted for the National Pension System (NPS) can withdraw up to 80% of their retirement corpus as a lump sum at the time of exit. Under a new set of rules issued by the Pension Fund Regulatory and Development Authority (PFRDA), effective December 2025, non-government subscribers whose accumulated pension wealth exceeds the specified monetary thresholds are allowed to withdraw up to 80% either as a lump sum or through a structured withdrawal system. The remaining 20% must be retained in the account and used to purchase an annuity, which provides periodic pension income.

Withdrawal clauses

For non-government NPS subscribers, exit rules depend on the accumulated pension wealth (APW) and the type of exit. On normal exit after 15 years, at age 60, or on superannuation, subscribers with APW up to Rs 8 lakh can withdraw the entire amount as a lump sum without buying an annuity. 

If APW exceeds this limit, a portion must be used to purchase an annuity. In case of voluntary exit before 60, annuity requirements are stricter unless the corpus is small. Upon the subscriber’s death, the nominee can receive up to 100% of the corpus, with annuity remaining optional.

1. Normal exit (after 15 years / age 60 / superannuation / physical incapacity)

If APW ≤ ₹8 lakh

100% lump sum allowed

No annuity required

If APW > ₹8 lakh and ≤ ₹12 lakh

You have three choices:

Withdraw up to ₹6 lakh lump sum, balance via systematic withdrawal

Withdraw up to ₹6 lakh lump sum, balance used for annuity

Withdraw up to 80% lump sum, minimum 20% annuity

If APW > ₹12 lakh

Withdraw up to 80% lump sum

At least 20% must go into annuity

2. Voluntary exit (before age 60)

If APW ≤ ₹5 lakh

100% lump sum allowed

No annuity required

If APW > ₹5 lakh

Withdraw up to 20% lump sum

At least 80% must go into annuity

3. Exit for those who joined NPS at or after age 60

If APW ≤ ₹12 lakh

100% lump sum allowed

No annuity required

If APW > ₹12 lakh

Withdraw up to 80% lump sum

At least 20% annuity compulsory

4. Death of subscriber (any scenario)

Up to 100% of APW can be paid to nominee

Annuity is optional, not mandatory

Applicability across NPS schemes

All exit and withdrawal provisions under the National Pension System (NPS) have now been standardised across account types, ensuring uniform application of rules for every NPS subscriber. Each individual can independently exercise exit options for every NPS account they hold, bringing consistency across government, corporate, NPS-Lite and Swavalamban schemes.

Govt vs Non-govt subscribers

However, government and non-government subscribers continue to operate under distinct frameworks. Government subscribers are permitted to withdraw their accumulated savings at retirement, superannuation or in cases of disability, subject to prescribed limits and conditions. Non-government subscribers—including corporate employees and all-citizen voluntary participants—follow exit and withdrawal rules aligned with their respective subscriber categories.

Missing and NRI subscribers

Special provisions have been introduced for missing subscribers. Where a subscriber is legally presumed dead, nominees are eligible to receive up to 20% of the accumulated corpus as interim relief. The remaining 80% is released only after legal confirmation of death under the Bharatiya Sakshya Adhiniyam, 2023. Any interim amount paid is adjusted if the subscriber is subsequently found alive.

Subscribers who renounce Indian citizenship are now allowed to close their NPS accounts and withdraw the entire accumulated corpus. Partial withdrawals continue to be capped at 25% of the subscriber’s own contributions and may be used for specified purposes such as loan repayment, even after retirement, subject to frequency limits.

Loan against NPS accounts

Additionally, NPS accounts can now be pledged to obtain loans from regulated financial institutions within PFRDA-prescribed limits. For NPS-Lite and Swavalamban subscribers, full withdrawal is permitted for balances up to Rs 2 lakh, with higher amounts requiring annuity purchase, up from the earlier Rs 1 lakh threshold.