NPS rules changed: When is 100% withdrawal allowed for government and non-government subscribers

The Pension Fund Regulatory and Development Authority (PFRDA) has revised the exit and withdrawal rules under the National Pension System (NPS), making it easier for subscribers with a smaller pension corpus to withdraw their entire savings at the time of exit.

As per the updated regulations, NPS subscribers can take out their entire pension savings in some situations, without being required to invest any portion in an annuity.

Non-government NPS subscribers: When 100% withdrawal is allowed

• If the total accumulated pension wealth is up to ₹8 lakh, the subscriber can withdraw the entire amount.

• There is no mandatory requirement to purchase an annuity in such cases.

• The full amount can be taken as a lump sum or through systematic withdrawals as permitted by PFRDA.

This means non-government subscribers with a pension corpus of up to ₹8 lakh get complete flexibility at exit.

Government NPS subscribers: When 100% withdrawal is allowed

• If the accumulated pension wealth is up to ₹8 lakh at the time of normal retirement, 100% withdrawal is allowed and purchasing an annuity is optional.

• In the event of the subscriber’s death, nominees or legal heirs can withdraw the entire NPS corpus if the accumulated amount is up to ₹8 lakh.

• If the total accumulated pension wealth is ₹5 lakh or less, full withdrawal is permitted even in cases of premature exit or death.

Government subscribers can also remain invested in NPS until the age of 85 years, after which they may exercise the exit option.

The withdrawal limit earlier was up to 60 per cent of the accumulated pension wealth, and the remaining was expected to be utilised for buying an annuity, providing for a monthly or any other periodical pension.