NPS Withdrawal Rules 2025: Big news has emerged regarding the National Pension System (NPS). The government has made significant changes to the NPS exit rules, reducing the mandatory annuity limit from 40% to 20%. This means that investors will now be able to withdraw up to 80% of their deposits in a lump sum upon retirement or under specified conditions. An official notification has been issued in this regard.
According to the new rules, if an investor’s total accumulated pension wealth (APW) is up to Rs 5 lakh (NPS full withdrawal Rs 5 lakh), they can withdraw 100% of the amount in one lump sum and will not be required to purchase an annuity. However, if the APW exceeds Rs 5 lakh, investors will be required to invest a maximum of 80% in lump sum and a minimum of 20% in annuity.
Applicable to government and private NPS account holders
The notification clarifies that these rules apply to NPS account holders in both government and non-government sectors. The lump sum withdrawal and annuity options have also been simplified for various circumstances, such as voluntary withdrawal, retirement, exit after age 60, and death.
Rules will make retirement planning easier
The government says the purpose of this change is to provide investors with greater flexibility and to meet their cash needs at the time of retirement. According to experts, the reduction in the annuity requirement has made NPS a more attractive investment option than before, especially for those who want a large lump sum upon retirement. Simply put, this change is considered beneficial for NPS investors and will make retirement planning (NPS retirement benefits) easier.