NPS Withdrawal Rules: The Pension Fund Regulatory and Development Authority (PFRDA) has made several important changes to the withdrawal and retirement conditions associated with the National Pension System (NPS). Under the new NPS withdrawal amendment rules, 2025, non-government NPS account holders can now withdraw up to 80 percent of their total accumulated funds. Previously, this limit was 60 percent, and the remaining 40 percent had to be compulsorily used to purchase a regular pension (annuity). Now, the minimum share for the annuity has been reduced to 20 percent.
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According to the new rules, the NPS account can now also be used as collateral for obtaining a loan. Account holders can take a loan from a bank or other recognized financial institution up to a certain limit and use the benefits from the NPS as security. In addition, the maximum age limit for withdrawals from the NPS account has been increased to 85 years, which was previously 70 years.
How much money can be withdrawn in a lump sum?
If a person’s total accumulated amount in their NPS account is less than Rs. 8 lakh, they can withdraw the entire amount at once. Account holders can also withdraw in installments or through other methods approved by the PFRDA.
Account holders will now have the facility of four partial withdrawals, whereas previously the limit was three. A minimum gap of 4 years will be required between every two partial withdrawals. However, after the age of 60, partial withdrawals can be made three times, and a minimum gap of 3 years must be maintained between each withdrawal.
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Rules also changed for government employees
Government employees can now remain in the NPS until the age of 85 years. At the time of retirement, they can withdraw 60 percent of the amount, while the remaining 40 percent will be mandatory for purchasing an annuity.
However, if a government employee resigns prematurely, is removed, or dismissed, 80 percent of their amount will go towards an annuity, and only 20 percent can be withdrawn as a lump sum. According to PFRDA, these revised rules will apply to account holders in all categories: government, non-government, and NPS-Lite. These changes aim to give people more freedom to use their pension funds according to their needs and convenience.