New NPS rules: 10 changes in accumulation, growth, pension withdrawal

Revised norms boost retirement liquidity by slashing mandatory annuity requirements and raising the full lump-sum withdrawal limit to Rs 8 lakh

The National Pension System (NPS) has changed how subscribers accumulate, manage and withdraw their retirement savings. The revised exit and withdrawal norms apply to government, non-government and NPS-Lite subscribers.

 

NPS New Rule: Here are 10 changes — announced by the Pension Fund Regulatory and Development Authority (PFRDA) — that NPS subscribers should know.

 

You can now stay invested till 85 years: The maximum age to remain invested in NPS has been raised to 85 years (up from 75). This applies to both government and private sector subscribers, allowing retirees to keep their money invested for longer if they do not need immediate withdrawals.

 

Lower mandatory annuity requirement: Non-government subscribers now only need to buy use only 20 per cent of their corpus for an annuity purchase at retirement. Earlier, the mandatory annuity portion was 40 per cent if the corpus exceeded Rs 5 lakh. This increases the lump-sum amount available at retirement.

 

Full withdrawal allowed for small corpuses: Subscribers, both government and non-government, can now withdraw their complete NPS corpus in lump sum if the total amount is Rs 8 lakh or less. Earlier, this limit was lower, forcing many to buy annuities even for modest savings.

 

New withdrawal slabs introduced: Up to Rs 8 lakh and more than Rs 8 lakh and up to Rs 12 lakh. Depending on the slab and circumstances, subscribers may withdraw a higher portion of their retirement savings as a lump sum.

 

Systematic withdrawals are now an option: PFRDA has introduced Systematic Unit Redemption, allowing subscribers to withdraw their corpus in a phased manner instead of a single lump sum. Those opting for this route must spread withdrawals over at least six years.

 

More partial withdrawals before 60: Subscribers can now make up to four partial withdrawals before turning 60, compared with three earlier. A minimum gap of four years between withdrawals will apply.

 

Post-60 withdrawals are made easier: Subscribers who stay invested beyond 60 years can make partial withdrawals with a minimum gap of three years, subject to a cap of 25 per cent of their own contributions.

 

Exit on loss of Indian citizenship: If an NPS subscriber renounces Indian citizenship, they can close their account and withdraw the entire corpus in lump sum.

 

Relief for families of missing subscribers: In cases where a subscriber is missing and presumed dead, nominees or legal heirs will receive 20 per cent of the corpus as interim relief, with the remaining amount paid after legal confirmation.

 

Account-level clarity improved: Regulations now focus on each individual pension account rather than a single retirement account, strengthening ownership clarity, especially for subscribers with multiple NPS accounts.

 

The changes make NPS more flexible and retirement-friendly, particularly for subscribers seeking higher liquidity and longer investment horizons.