NPS: There is a major update for NPS subscribers. The Pension Fund Regulatory and Development Authority has updated the rules, which will take effect in December 2025. Now, under specific conditions, subscribers can withdraw their full corpus, or 100% of their deposits. The previous rules were quite strict, but they’ve loosened up for those with smaller deposits. This is particularly advantageous for individuals not working in government.
When it comes to retirement, meaning at age 60 or older, if your NPS deposit is Rs 8 lakh or less, you can take out the whole amount at once. There’s no need to buy an annuity. The previous limit was Rs 5 lakh, but it’s been raised toRs 8 lakh now. If your corpus is more than Rs 8 lakh but not exceeding Rs 12 lakh, you can withdraw a larger lump sum, but there are some conditions to meet. For those with a corpus over Rs 12 lakh, you must invest up to 80 percent in a lump sum and at least 20 percent in an annuity. These new rules give retirees more flexibility.
The rules for leaving the scheme early are a bit different. If you’ve completed the five-year lock-in period and your corpus is Rs 5 lakh or less, you get the full lump sum back. If it’s more than Rs 5 lakh, you need to invest up to 20 percent of the lump sum, while the remaining 80 percent goes into an annuity. The previous rules were similar, but the increase in the limit for smaller amounts has offered some relief.
In the event that an NPS subscriber passes away, the nominee or legal heir will receive 100% of the entire corpus in one lump sum. There’s no annuity requirement, regardless of how big the corpus is. These rules were already in place and remain unchanged in the case of death. The family gets the full corpus right away, which is really important.
Those who joined the NPS before the age of 60 can make a normal exit at 60. If you joined after 60, you have the option to exit after three years. The exit age has now been extended to 85, meaning you can continue investing and withdrawing until you reach 85. This is beneficial for longevity. These new rules make NPS easier, as those with smaller funds can withdraw the entire amount. Those with larger funds can also withdraw a larger lump sum. Lump sums are tax-deductible if the rules are followed. Income tax is levied on the monthly pension received from annuities.
NPS is now simpler and more user-friendly for retirement savings. Those with smaller balances can easily withdraw their full amount without any trouble. This is great news for Indians who are looking to secure their future. Make sure to understand the rules and make informed choices to guarantee a joyful retirement.
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Sweta Mitra
Working in the media for last 7 years. The journey started in the year 2018. For the past few years, my working experience has been in Bengali media. Currently working at Timesbull.com. Here I write like Business, National, and Utility News. My favorite hobbies are listening to music, traveling, food,...
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