The Pension Fund Regulatory and Development Authority (PFRDA) on Tuesday announced key amendments to the National Pension System (NPS), aimed at providing greater flexibility to subscribers from non-government sectors.
According to a PFRDA notification, a non-government subscriber can withdraw up to 80 per cent of fund accumulated amounting more than ₹12 lakhs from the National Pension Scheme post-retirement. However, there is no change for the government employees, and their withdrawal cap would be up to 60 per cent.
Earlier, for both categories, the withdrawal limit was 60 per cent, while remaining 40 per cent to be used for buying annuity to pay monthly pension.
The notification said upon 15 years or more of depositing subscription, or on attaining 60 years, or on superannuation, a subscriber from the non-government can withdraw entire amount if the accumulated pension wealth is ₹8 lakh or less.
If the amount is between ₹8 lakh and ₹12 lakh, then out of that ₹6 lakh can be withdrawn while balance will be used for annuity.
However, if the accumulated wealth is more than ₹12 lakh, then allowing subscribers can take up to 80 per cent as a lump sum while remaining 20 per cent to be used for annuity as against earlier formula of 60 and 40 per cent.
This change means more money at the time of exit and flexibility in managing retirement income according to their needs.
The revised rules now allow subscribers to remain invested until the age of 85, unless they choose to exercise an exit option. Normal exit has now been permitted after completing 15 years of subscription or upon attaining 60 years of age, superannuation, or retirement—whichever comes first.
According to the notification, upon the death of subscribers before annuity purchase or lump sum withdrawal, the accumulated pension wealth will be paid to the nominees or legal heirs.
If the subscriber is missing and presumed dead, the nominees or legal heirs will be paid 20 per cent of the corpus as interim relief, and the remaining balance upon determination as missing and presumed dead as per the provisions of the Bharatiya Sakshya Adhiniyam, 2023.
In case of renunciation of citizenship, subscribers can exit from NPS by closing the individual pension account and withdrawing the entire accumulated pension wealth in a lump sum.
The notification also said that upon premature exit from NPS, at least 80 per cent of the corpus will be utilized for annuity, and the remaining balance shall be paid in a lump sum.
If the pension balance is less than ₹5 lakh, the entire amount can be withdrawn in a lump sum. The exit option for subscribers who are physically incapacitated or disabled (at least 75 per cent) requires them to furnish a medical certification from a government surgeon or doctor.
Published on December 16, 2025
