In December 2025, the Pension Fund Regulatory and Development Authority (PFRDA) which works under the Ministry of Finance (MoF), notified ‘PFRDA (Exits and Withdrawals under the National Pension System (NPS)) (Amendment) Regulations, 2025’, amending the principal Regulations of 2015.
- These amendments, primarily targeting the Non-government sector (All Citizen Model and Corporate Sector), are now applied uniformly to Common Schemes (CS) and the Multiple Scheme Framework (MSF), while also streamlining certain provisions for government subscribers.
Exam Hints:
- What? Notification of PFRDA (Exits and Withdrawals under the National Pension System (NPS)) (Amendment) Regulations, 2025.
- Notified by: PFRDA, MoF
- Sector Focus: Non-Government Sector (All Citizen Model & Corporate Sector)
- Schemes Covered: Common Scheme (CS) and Multiple Scheme Framework (MSF)
- Key Changes:
- 5-year lock-in removed for All Citizen Model (CS & MSF)
- Vesting Period (All Citizen): 15 years or till 60 years (whichever earlier)
- Lump sum withdrawal: Increased to up to 80%
- Minimum annuity: Reduced to 20% (from 40%) for non-government subscribers
- Maximum NPS age: Increased from 75 to 85 years
- Partial withdrawals: Increased from 3 to 4 times (before 60 years)
- Automatic continuation: 15-day prior intimation requirement removed
Key Changes Under Revised Regulations:
Removal of Lock-in Period: For all citizen models (including CS and MSF), PFRDA has now removed the mandatory 5-year lock-in period, a minimum subscription time period before becoming eligible for premature exit.
Change in Vesting Period: For the All Citizen Model, the vesting period, the minimum subscription duration required to qualify for a normal exit, is 15 years or until the subscriber reaches 60 years of age, whichever comes first.
- For the Corporate Sector (CS and MSF), the vesting period remains unchanged, lasting until the subscriber reaches the age of retirement/superannuation.
Lump sum and Annuity: For both the All Citizen Model and the Corporate Sector (CS & MSF), subscribers can withdraw up to 80% of their corpus as a lump sum (from previous 60%), while the remaining minimum 20% must be used to purchase an annuity.
- It has lowered the compulsory minimum annuity purchase requirement for non-government subscribers from 40% to 20% of the total Accumulated Pension Wealth(APW) in specified cases.
Maximum Age to Stay in NPS: PFRDA has also increased the maximum age limit to stay in NPS from existing 75 years to 85 years, and has also clarified that this new age limit is applicable to both non-government and government subscribers.
Automatic Continuation: The requirement of 15-day prior intimation has been removed across all sectors, allowing subscribers to continue seamlessly under NPS without additional formalities.
Withdrawal Limit:
- Before 60 years/superannuation (whichever is later): Up to 4 withdrawals allowed, with a minimum gap of 4 years between two withdrawals.
- After 60 years/superannuation (whichever is later): No limit on frequency, subject to a minimum interval of 3 years between withdrawals.
Partial Withdrawals: PFRDA has further laid conditions for subscribers who opt for this option i.e. the amount of withdrawal should not exceed 25% of (i)contribution, in case there is only contribution stream, or (ii) own contribution, in case there is more than one contribution stream.
Withdrawal Criteria: The new regulations have specified different withdrawal rules based on the size of retirement corpus:
- If maximum APW is Rs 8 lakh: Both government and non-government subscribers will be able to withdraw the entire (100%) amount as a lump sum. However, the government subscribers will have the option to purchase annuity at least 40% of their corpus while non-government subscribers will be required to purchase annuity from at least 20% of their retirement corpus.
- APW between Rs 8 lakh and Rs 12 Lakh: Subscribers will be able to withdraw a maximum Rs 6 lakh, while the remaining amount will be used for annuity purchase or Systematic Unit Redemption (SUR)over a period of up to 6 years.
- APW above Rs 12 Lakh: Non-subscribers will be allowed to withdraw a maximum 80% of their retirement corpus, while the remaining 20% will be disbursed as annuity, while government subscribers will continue to withdraw maximum 60%, with the remaining amount will be used in annuity.
Loans against NPS: Now, subscribers will have the option to seek financial assistance from a regulated financial institution in cases like: higher education, marriage, purchase of house, or for illness.
- As per the new rules, they will be allowed to take maximum 25% of own contributions, as a loan.
Exit from NPS:
In case of renunciation of Indian Citizenship: In such case, the subscriber will have the option to close the individual pension and withdraw the entire APW in a lump sum.
Missing and Presumed Dead Subscriber: In case where NPS subscriber is missing or is presumed dead, legal heir of the subscriber will get 20% of the APW as an interim relief in lump sum, while remaining 80% will be paid after legal presumption of death as per the provisions of the Bharatiya Sakshya Adhiniyam, 2023.
Exit on Death: Subscribers’ nominees are allowed a 100% lump sum withdrawal, with the option to opt for an annuity if desired (Remains same).
About Pension Fund Regulatory and Development Authority (PFRDA):
It was initially established as a regulatory body to promote, develop and regulate the pension sector in India. Later, it was granted a statutory body status through PFRDA Act, 2013 passed in September 2013 and the same was officially notified on February 01, 2014.
Chairman- Sivasubramanian Ramann
Headquarters- New Delhi, Delhi
Established – 2003
