New NPS Exit & Withdrawal Rules 2025: Key Changes Explained

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New NPS Exit & Withdrawal Rules 2025: Key Changes Explained





The Pension Fund Regulatory and Development Authority (PFRDA) has released a comprehensive guide to the newly amended NPS Exit and Withdrawal Regulations. Following the formal gazette notification, this latest press release (dated December 19, 2025) aims to simplify the legal language for everyday subscribers.

The update brings significant relief and flexibility, particularly for private-sector employees and those joining NPS late in life.

1. Major Shift for Non-Government Subscribers

For the first time, the PFRDA has significantly relaxed the "lock-in" and "vesting" requirements for the All Citizen Model and Corporate Sector.

  • Lock-in Period: Completely abolished for the All Citizen Model.

  • Vesting Period: Now set at 15 years or reaching age 60 (whichever comes first). This gives voluntary subscribers much more control over when they can access their funds.

2. Higher Lumpsum Limits (Normal Exit)

Subscribers can now withdraw a larger portion of their wealth as a lumpsum. Previously capped at 60%, the new ceiling is as high as 80% depending on the corpus size.

Total Corpus SizeNew Exit Rule
Up to ₹8 LakhOption to withdraw 100% as a lumpsum.
₹8 Lakh – ₹12 LakhLumpsum up to ₹6 Lakh + balance via Annuity or Systematic Withdrawal (SUR).
Above ₹12 LakhUp to 80% Lumpsum; minimum 20% must be used for an Annuity.

3. Updates for Government Employees

The standard 60:40 (Lumpsum:Annuity) ratio remains for most government staff, but those with smaller accumulations get new benefits:

  • Corpus up to ₹8 Lakh: Now eligible for 100% lumpsum withdrawal.

  • Corpus ₹8–12 Lakh: Can take ₹6 Lakh as a lumpsum and use the rest for SUR/Annuity.

  • Above ₹12 Lakh: Continues with the existing 60% lumpsum and 40% annuity structure.

4. Special Provisions for Senior Citizens (Entry after 60)

For individuals who join the National Pension System after the age of 60, the rules have been dramatically simplified:

  • No Vesting Period: You can exit normally at any time without a mandatory waiting period.

  • Higher Threshold: 100% withdrawal is permitted if the total corpus is up to ₹12 Lakh.

  • Increased Lumpsum: For larger amounts, the 80% lumpsum limit applies.

5. New Rules for Loans and Partial Withdrawals

The PFRDA has introduced a "Lien" system, allowing NPS to act as a financial asset for credit.

  • NPS Loans: Subscribers can now seek loans from regulated banks/FIs by placing a lien on up to 25% of their own contributions.

  • Partial Withdrawal Purposes: Medical reasons have been broadened (no longer limited to a specific list of illnesses). Loan settlement against an NPS lien has also been added as a valid reason for withdrawal.

  • Frequency: Maximum of 4 withdrawals allowed before age 60, with a minimum 4-year gap between each.

6. Extended Age Limits

In a move to accommodate longer working lives and late retirement, the PFRDA has extended the age brackets:

  • Maximum Entry Age: Increased to 85 years.

  • Maximum Exit Age: Extended to 85 years.

  • Automatic Continuation: Subscribers no longer need to submit a 15-day advance notice to stay in the scheme; continuation is now the default setting.





7. Death Benefits

In the unfortunate event of a subscriber's death, nominees now have more ways to manage the legacy:

  • 100% Lumpsum remains an option.

  • New: Nominees can now choose Systematic Lump-sum Withdrawal (SLW) or SUR instead of just a one-time payment or annuity.

Summary: The 2025 amendments transform the NPS from a rigid pension tool into a highly flexible retirement-cum-savings vehicle. By increasing the 100% withdrawal threshold and allowing for loans against contributions, the PFRDA has made the scheme significantly more attractive for the modern Indian workforce.



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