NPS rules: The National Pension System (NPS) has undergone significant changes. The Pension Fund Regulatory and Development Authority (PFRDA) has made these changes to make it more attractive to subscribers. It has now become more flexible for both the private sector and the general public.
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NPS rules: There’s good news for those investing in the National Pension System (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) has made several major changes for NPS subscribers. These changes will apply to all government, non-government, and NPS-Lite (Swavalamban) subscribers. These changes have made NPS more flexible and beneficial. Here, we’re telling you about 10 rules that have been changed.
Investment Age
The biggest change is that NPS subscribers can now continue investing in their NPS account until the age of 85, instead of the current age of 75. This feature is available to both government and non-government subscribers. This means you can extend your retirement planning and accumulate more wealth.
Option to Purchase a 20% Annuity
Previously, upon retirement or under certain circumstances, you were required to invest 40% of your total accumulated wealth toward annuity. This was especially true if your accumulated corpus exceeded ₹5 lakh. However, this rule has now changed for non-government sector subscribers. They can now invest only 20% of their accumulated pension wealth toward annuity. An annuity is a type of pension plan that provides regular income after retirement.
100% Withdrawal Facility
Another major change is that both government and non-government subscribers can now withdraw 100% of their NPS account at once, even if their accumulated corpus was ₹8 lakh or less. Previously, this facility was available only under certain conditions.
Systematic Unit Redemption Launched
A new method of withdrawing funds from NPS has also been introduced, called ‘Systematic Unit Redemption.’ In this method, subscribers from both the government and non-government sectors withdraw units from their NPS corpus gradually, i.e., in installments. However, to avail this facility, you must withdraw these units for at least six years. This may be beneficial for those who do not want to withdraw a large sum of money at once after retirement, but rather want to withdraw money gradually as per their needs.
New Corpus Slabs
The government has also created new NPS corpus slabs. There will now be different rules for corpus amounts up to ₹8 lakh, more than ₹8 lakh, and up to ₹12 lakh. If your accumulated corpus is ₹8 lakh or less, you can withdraw up to 100% of your NPS retirement corpus at age 60, or under certain circumstances.
Facility to Withdraw More Times Before 60
Now, NPS subscribers will be able to withdraw a maximum of four times before the age of 60, or before superannuation or retirement, whichever is later. Previously, this limit was three. However, a minimum four-year gap is required between each withdrawal. This is a relief for those who may suddenly need money before the age of 60.
A 3-year gap for withdrawals even after 60
If you remain in the NPS after the age of 60, you can make partial withdrawals from your corpus. These partial withdrawals must now be spaced at least three years apart. However, to avail this facility, the withdrawal amount must not exceed 25% of your total contribution. If you have more than one contribution stream, it will be 25% of your ‘own contribution’.
Exit Facility
According to the new rules, if an NPS subscriber ceases to be an Indian citizen, they can close their individual pension account and withdraw the entire accumulated corpus at once. This is an important facility for those who settle abroad or acquire citizenship of another country.
Exit in Case of a Missing or Presumed Dead Person
The pension body has also clarified the rules for cases where an NPS subscriber goes missing or is presumed dead. In such cases, the nominee or legal heir of the missing subscriber will receive a lump sum of 20% of the total amount deposited immediately as interim relief. The remaining 80% will remain invested and will be paid when the subscriber is declared missing and dead in accordance with the provisions of the Indian Evidence Act, 2023.
Account-Centric Approach Strengthened
The new NPS rules have replaced the term “Permanent Retirement Account” with “Each Individual Pension Account.” This change further strengthens account-level ownership and management, especially in cases where subscribers have multiple accounts. This ensures that each account is managed separately and clearly.
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