The National Pension System is undergoing several major changes effective October 1st that will benefit investors. These rules range from withdrawals to equity investment limits.
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From train ticket booking to pensions, many changes are coming from October 1st, including the rules for the National Pension System (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) is implementing several significant changes to the National Pension System from October 1st, 2025.
Under the new NPS rules, non-government employees can now choose to invest up to 100% in equities. This change is intended to provide higher returns to investors, but it will come at their own risk, as it involves stock market risk. Additionally, a new Multiple Scheme Framework (MSF) will be introduced, allowing investors to manage different schemes under a single PRAN number.
Exit and withdrawal rules will also change.
Previously, investors had the option to exit only after retirement, but now they can exit after 15 years. Furthermore, the partial withdrawal process for needs such as education, medical expenses, or home construction will be simplified, similar to PF. This will provide investors with a flexible framework.
These rules will remain unchanged
There will be no change in the tax rules regarding withdrawals. Of the 80% lump sum withdrawal, 60% will be tax-exempt, while the remaining 20% will be taxable according to the income slab. Last year, the government launched the Unified Pension Scheme (UPS), which was exclusively for central government employees. However, its response was poor, and now they have been given the option to return to the National Pension System.
What are the benefits for investors?
The opportunity to invest 100% of the amount in NPS offers the expectation of higher returns, which can help them grow their wealth faster. Additionally, the opportunity for equity investment and easy withdrawal rules will make NPS more attractive to investors. This will also help investors withdraw funds and replenish their funds in case of emergencies.
