NPS Withdrawal Rules Change: FRDA has amended the NPS withdrawal rules. Non-government contributors can now withdraw 80% of the corpus. The withdrawal age has been raised to 85 years, and four partial withdrawals will be permitted…
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NPS Rules changes: Pension fund regulator PFRDA has made several important changes in the withdrawal and retirement provisions of the National Pension System (NPS). Under this, now non-government subscribers can withdraw a maximum of 80 percent of the total amount deposited in the pension fund at the time of withdrawal.
Earlier, the fund withdrawal limit was 60 percent, while the remaining 40 percent had to be used to purchase a regular pension (annuity). This important change has been made in the NPS Withdrawal Amendment Rules 2025 issued by the Pension Fund Regulatory and Development Authority (PFRDA). According to this, now the NPS account can also be kept as a guarantee before financial institutions for taking a loan up to a certain limit.
The PFRDA said that the subscriber shall have the right to obtain financial assistance from a regulated financial institution up to a certain limit by way of transfer, guarantee, contract, order, sale or security in any form in favour of the lender of any benefit accruing from the NPS.
Withdrawal age increased to 85 years
Under the new rules, the NPS withdrawal age has been raised to 85 years, up from 70 years previously. According to the revised rules, subscribers can withdraw the entire amount in one lump sum if their pension corpus falls below ₹8 lakh. If they wish, they can also withdraw the entire amount through systematic one-time withdrawals, systematic unit payments, or other options approved by the Pension Fund Regulatory and Development Authority (PFRDA).
The new rules issued by the Pension Fund Regulator will become effective from the date of publication in the gazette. Subscribers will now be allowed to make four partial withdrawals, but with a minimum gap of four years between each withdrawal. Previously, only three partial withdrawals were permitted.
At the same time, after the retirement age of 60 years, partial withdrawal can be made thrice and a minimum gap of three years will have to be maintained between each withdrawal. By bringing the fixed portion of regular pension (annuity) to 20 percent, the regulator has given this facility to NPS subscribers that they can use their deposited funds as per their need and wish.
Rules Changed for Government Employees
The PFRDA has also amended the withdrawal rules for government employees. Government employees can now remain in the NPS until the age of 85. However, they will only be allowed to withdraw 60 percent of their pension upon retirement, with the remaining 40 percent set aside for annuity purchase.
However, if a government employee leaves the NPS due to premature resignation, removal, or dismissal, 80 percent of the pension amount will be used to purchase annuity, and the remaining can be withdrawn as a lump sum. The PFRDA stated that the revised rules will apply to all categories of subscribers—government, non-government, and NPS-Lite—and will allow them to more flexibly utilize their pension funds according to their needs and preferences.
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