NPS changes: 10 new rules you must know about NPS accumulation, growth and withdrawal
Dec 16, 2025
Synopsis
The Pension Fund Regulatory and Development Authority (PFRDA) has introduced significant changes to the National Pension System (NPS). Key updates include a reduced annuity limit to 20%, the option for subscribers to remain in NPS until 85 years of age, and the introduction of Systematic Unit Redemption for at least six years.
NPS changes: In a major overhaul, PFRDA has introduced a number of changes for National Pension System (NPS) subscribers from government, non-government and NPS-Lite NPS-Lite Swavalamban. Some of the key changes that have been introduced are a reduced annuity limit of 20%, an option for subscribers to stay in NPS until 85 years of age and the introduction of Systematic Unit Redemption for at least six years.
In this write-up, we take you through 10 key NPS changes that the pension body has introduced today in the form of PFRDA(Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025.
NPS subscribers can stay in NPS till 85 years of age
In a big move, the government has increased the maximum age to stay in NPS from 75 years to 85 years. The rule will be applicable for non-government and government subscribers both.
20% annuity purchase rule
On superannuation and in some other conditions, non-government sector subscribers can now purchase an annuity from 20% of their total corpus, i.e., Accumulated Pension Wealth (APW). Earlier, a person had to purchase an annuity from 40% of their corpus on superannuation if their accumulated corpus was more than Rs 5 lakh.
100% corpus withdrawal allowed in some cases
Government and non-government sector subscribers are allowed to withdraw 100% of their corpus in the form of a lump sum even if their corpus is equal to or less than Rs 8 lakh. Earlier, this limit was Rs 2.50 lakh at the time of exit.
Systematic unit redemption
The government has also started a new method of withdrawing the NPS corpus. Under the Systematic Unit Redemption, a subscriber from the government and non-government sectors withdraws units from their corpus systematically. However, anyone opting for this option has to withdraw units at least for six years.
New corpus slabs of ≤ ₹8 lakh / ₹12 lakh
The government has also introduced a new lump sum withdrawal slab of equal to less than Rs 8 lakh and more than Rs 8 lakh to less than or equal to Rs 12 lakh slabs for government and non-government subscribers. In the less than or equal to Rs 8 lakh slab, subscribers from both sectors, on attaining 60 years of age and in certain circumstances, can also withdraw 100 per cent of their NPS retirement corpus.
More withdrawals allowed now before 60 years of age
NPS subscribers will now be allowed to withdraw up to a maximum of four times prior to attaining 60 years of age or prior to superannuation or retirement, whichever is later. This condition will apply with a minimum interval of four years between successive withdrawals. Earlier, the limit for the same withdrawal was three.
Post-60 withdrawals allowed with 3 years of gap
NPS subscribers who remain in NPS beyond 60 years of age or beyond superannuation or retirement will now be eligible to make partial withdrawals from their corpus with a minimum interval of three years between successive withdrawals.
However, to opt for this options, the of an amount of the withdrawal should not exceed 25% of (i) Contribution, in case there is only one contribution stream, or (ii) Own contribution, in case there is more than one contribution stream.”
Exit in case of renunciation of Indian citizenship
The new rule says that if an NPS subscriber ceases to be a citizen of India, he shall have the option to close the individual pension account and withdraw the entire accumulated pension wealth in a lump sum.
Exit in case of a missing and presumed dead person
The pension body has also clarified rules related to pensions given to legal heirs in case the NPS subscriber goes missing or is presumed to be a dead person. As per the new rule- the nominee(s) or the legal heir(s) of the NPS subscriber identified as missing will be entitled to be paid 20% of the accumulated pension wealth as an interim relief in a lump sum. The balance of 80% will remain invested and be paid upon the determination of such subscriber as missing and presumed dead as per the provisions of the Bharatiya Sakshya Adhiniyam, 2023.
Account-centric approach strengthened
The new NPS regulations has also replaced references to the 'Permanent Retirement Account' with 'each individual pension account'. Such a change has reinforced account-level ownership and treatment, especially in cases where subscribers hold multiple accounts.
[The Economic Times]
