PFRDA Notifies Major Changes in NPS Exit and Withdrawal Rules Under 2025 Amendment Regulations

PFRDA Notifies Major Changes in NPS Exit and Withdrawal Rules Under 2025 Amendment Regulations

Pension Fund Regulatory and Development Authority (PFRDA) has notified the National Pension System (Exits and Withdrawals) (Amendment) Regulations, 2025, bringing wide-ranging changes to exit norms, withdrawal options and definitions across government, non-government and NPS-Lite subscribers.

The amended regulations came into force from the date of publication in the Official Gazette on December 12, 2025.

One of the key changes is a clear separation of exit rules based on subscriber category, with revised thresholds for lump sum withdrawals, annuity purchase and systematic payouts.

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The new regulations now clearly define exits, deferment, non-government subscribers, corporate subscribers and pension schemes, while removing several outdated references from the 2015 framework.

For government sector subscribers, the rules allow continuation in NPS up to the age of 85 years unless an exit option is exercised. At superannuation or retirement, a minimum 40% of accumulated pension wealth must be used for annuity purchase, while the balance can be withdrawn as lump sum or periodic payouts.

However, if the accumulated pension wealth does not exceed ₹8 lakh, full withdrawal is permitted. For corpus between ₹8 lakh and ₹12 lakh, up to ₹6 lakh can be withdrawn, with the remaining amount used for annuity or systematic payouts.

In cases of resignation, removal or dismissal from service, at least 80% of pension wealth must be used for annuity purchase, except where the corpus is ₹5 lakh or less, in which case full withdrawal is allowed. Similar thresholds apply in death cases, with flexibility provided to nominees or legal heirs depending on the accumulated pension wealth.

For non-government sector subscribers, including All Citizen and corporate sector participants, the regulations permit exit after 15 years of subscription, attainment of 60 years of age, or superannuation. A minimum 20% annuity purchase is mandatory, with higher lump sum flexibility for smaller pension wealth.

Full withdrawal is allowed where the corpus does not exceed ₹8 lakh, while graded options apply up to ₹12 lakh. Voluntary exit before eligibility attracts a higher mandatory annuity requirement of 80%, unless the accumulated wealth is ₹5 lakh or less.

The regulations also introduce special provisions for subscribers who join NPS after attaining 60 years, physically incapacitated subscribers, those renouncing Indian citizenship, and cases where a subscriber is missing and presumed dead under the Bharatiya Sakshya Adhiniyam, 2023. In missing person cases, nominees or legal heirs are eligible for 20% interim relief, with the balance payable after legal determination.

Partial withdrawal norms have been liberalised, allowing withdrawals of up to 25% of own contributions, with revised frequency rules and an added provision permitting withdrawal for settlement of loans taken against NPS lien. The amendment also strengthens the ability of subscribers to seek financial assistance from regulated institutions against permissible NPS benefits.

Detailed tabular formats for exit benefits across government sector, non-government sector and NPS-Lite subscribers have been incorporated in Schedule I, bringing clarity and uniformity to withdrawal outcomes.

The notification replaces several legacy provisions, updates legal references, and aligns NPS exit rules with evolving pension practices, offering greater flexibility, transparency and subscriber protection while preserving the core objective of long-term retirement security.