PFRDA (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025

What it is?

• A set of amended regulations governing withdrawal, exit, deferment, annuity requirements, loans, and death-related settlements under the National Pension System (NPS).

Key features:

• Higher lump sum withdrawal:
  • Non-government subscribers: Up to 80% lump sum, mandatory annuity reduced to 20% (earlier 40%).
  • Government subscribers: Existing 60:40 (lump sum : annuity) continues.
• Enhanced exit deferment:
  • Subscribers can defer lump sum withdrawal or annuity purchase up to age 85 (earlier 75).
• Corpus-based flexibility (non-govt):
  • Accumulated Pension Wealth ≤ ₹8 lakh: 100% lump sum allowed.
  • ₹8–12 lakh: Options of ₹6 lakh lump sum or 80:20 split.
  • ₹12 lakh: Up to 80% lump sum, 20% annuity mandatory.
• Voluntary exit norms:
  • Accumulated Pension Wealth ≤ ₹5 lakh: 100% lump sum permitted; otherwise 20:80 applies.
• Death cases:
  • 100% lump sum or 100% annuity allowed for non-govt subscribers irrespective of corpus.
• Loans against NPS:
  • Permits loans from regulated institutions up to 25% of own contributions.
• Partial withdrawals clarified:
  • House construction allowed as one-time withdrawal.
  • Medical withdrawals broadened to any medical treatment/hospitalisation of self/family.
• No fixed 5-year lock-in:
  • Exits governed by eligibility and annuity rules, improving liquidity.
• Missing subscriber provision:
  • 20% interim relief to nominees; balance settled after legal presumption of death (as per Bharatiya Sakshya Adhiniyam, 2023).

About 

National Pension System (NPS):

• What it is?
  • A market-linked, defined contribution pension scheme aimed at providing retirement income through systematic savings.
• Launched in: 2004 (initially for government employees; later expanded)
• Regulatory authority:
• • Regulated and administered by Pension Fund Regulatory and Development Authority under the PFRDA Act, 2013.
• Key features:
• • Voluntary, portable, flexible retirement savings scheme.
  • Eligible subscribers:
    • Central & State Government employees (as opted), corporate employees, and all citizens (18–70 years) including NRIs.
  • Account structure:
    • Tier I: Mandatory retirement account (restricted withdrawals).
    • Tier II: Voluntary savings account (free withdrawals; requires active Tier I).
  • Tax efficiency:
    • Contributions eligible for tax benefits; Seva Nidhi / withdrawals subject to prevailing tax rules.