There is good news for people investing in the National Pension System (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) has introduced several important changes to NPS rules.
These new rules apply to government employees, non-government subscribers, and NPS-Lite Swavalamban subscribers.
The aim of these changes is to make the NPS scheme more flexible, investor-friendly, and beneficial for long-term retirement planning. Below are 10 major rule changes that every NPS subscriber should know about.
Investment Age Extended Up to 85 Years
One of the most significant changes is related to the maximum investment age. Earlier, NPS subscribers could continue investing only until the age of 75. Now, subscribers can continue investing in their NPS account until the age of 85.
This rule applies to both government and non-government subscribers. With this extension, investors get more time to grow their retirement corpus and strengthen their financial security after retirement.
Reduced Annuity Purchase Requirement to 20%
Earlier, at the time of retirement, subscribers were required to use 40% of their accumulated NPS corpus to purchase an annuity, especially if the total amount exceeded ₹5 lakh.
Now, for non-government sector subscribers, this requirement has been reduced. They need to invest only 20% of their accumulated pension wealth in an annuity.
An annuity is a pension plan that provides regular income after retirement. This change allows retirees to keep more money in hand.
100% Withdrawal Facility for Smaller Corpus
Another major relief is related to full withdrawal. Government and non-government subscribers can now withdraw 100% of their NPS balance at once if their total corpus is ₹8 lakh or less.
Previously, this full withdrawal option was available only in limited situations. This change makes it easier for retirees with smaller savings to access their entire amount without restrictions.
Introduction of Systematic Unit Redemption
PFRDA has introduced a new withdrawal option called Systematic Unit Redemption. Under this method, subscribers can withdraw their NPS funds gradually in installments instead of taking a lump sum.
This facility is available to both government and non-government subscribers. However, withdrawals must be spread over a minimum period of six years.
This option is useful for retirees who prefer a steady flow of money rather than withdrawing a large amount at once.
New Corpus Slabs Introduced
The government has introduced new NPS corpus slabs with different rules. These slabs are:
Up to ₹8 lakh
Above ₹8 lakh
Up to ₹12 lakh
If your total NPS corpus is ₹8 lakh or less, you can withdraw up to 100% of the amount at the age of 60 or under specific conditions. These slabs bring more clarity and flexibility to withdrawal rules.
More Frequent Withdrawals Allowed Before Age 60
NPS subscribers can now make up to four partial withdrawals before the age of 60 or before retirement, whichever is later. Earlier, this limit was only three withdrawals.
However, there must be a gap of at least four years between each withdrawal. This change helps subscribers manage financial emergencies more easily before retirement.
Three-Year Gap for Withdrawals After Age 60
If a subscriber continues in the NPS even after turning 60, they can still make partial withdrawals. As per the new rules, there must be a minimum gap of three years between such withdrawals.
The withdrawal amount must not exceed 25% of the total contribution. If the subscriber has multiple contribution streams, the limit will be 25% of their own contribution only.
Exit Facility for Loss of Indian Citizenship
A new exit option has been introduced for subscribers who cease to be Indian citizens. In such cases, the subscriber can close their NPS account and withdraw the entire accumulated amount at once.
This rule is especially useful for individuals who settle abroad or acquire citizenship of another country.
Rules for Exit in Case of Missing or Presumed Dead Subscriber
PFRDA has also clarified the process in cases where an NPS subscriber goes missing or is presumed dead. In such situations:
The nominee or legal heir will receive 20% of the total deposited amount immediately as interim relief.
The remaining 80% will stay invested.
This remaining amount will be paid once the subscriber is officially declared missing and dead as per the Indian Evidence Act, 2023.
Stronger Account-Centric Approach Introduced
Under the new rules, the term “Permanent Retirement Account” has been replaced with “Each Individual Pension Account.” This change strengthens account-level ownership and management.
It is particularly helpful for subscribers who have multiple NPS accounts, ensuring that each account is managed clearly and separately without confusion.
