There is good news for people investing in the National Pension System (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) has announced several important changes to NPS rules.
These changes apply to government employees, non-government subscribers, and NPS-Lite Swavalamban subscribers.
The new rules make NPS more flexible, investor-friendly, and beneficial. Below are 10 major changes every NPS subscriber should know.
Higher Age Limit for Investment
One of the biggest changes is the increase in the investment age limit. NPS subscribers can now continue investing in their NPS account up to the age of 85, instead of the earlier limit of 75 years.
This facility is available for both government and non-government subscribers, allowing them to extend retirement planning and build a larger corpus.
Reduced Annuity Requirement to 20%
Earlier, at the time of retirement or exit, subscribers had to invest 40% of their total NPS corpus in an annuity, especially if the corpus exceeded ₹5 lakh.
Now, non-government sector subscribers are required to invest only 20% of their accumulated pension wealth in an annuity.
An annuity provides regular income after retirement, and this change gives subscribers more control over their money.
100% Withdrawal Facility Expanded
Both government and non-government subscribers can now withdraw 100% of their NPS corpus at once if the total deposit is ₹8 lakh or less.
Earlier, this full withdrawal option was available only in limited situations.
Systematic Unit Redemption Introduced
PFRDA has introduced a new withdrawal option called Systematic Unit Redemption.
Under this facility, subscribers can withdraw their NPS corpus gradually in installments instead of taking out a lump sum.
To use this option, withdrawals must be spread over a minimum period of six years.
This is useful for retirees who prefer steady withdrawals based on their needs.
New Corpus Slabs Announced
The government has introduced new NPS corpus slabs with different rules:
Up to ₹8 lakh
Above ₹8 lakh
Up to ₹12 lakh
If your accumulated NPS corpus is ₹8 lakh or less, you can withdraw 100% of the amount at age 60 or in certain special situations.
More Withdrawal Opportunities Before Age 60
NPS subscribers can now make up to four partial withdrawals before the age of 60 or before retirement, whichever is later.
Earlier, only three withdrawals were allowed.
Each withdrawal must have a minimum gap of four years, providing more flexibility during emergencies.
Partial Withdrawals After Age 60
If you continue with NPS even after turning 60, you can still make partial withdrawals.
These withdrawals must have a gap of at least three years.
The withdrawal amount cannot exceed 25% of your total contribution.
If you have multiple contribution streams, the limit will be 25% of your own contribution.
Exit Facility for Non-Indian Citizens
Under the new rules, if an NPS subscriber ceases to be an Indian citizen, they can close their NPS account and withdraw the entire accumulated amount in one go.
This is especially helpful for individuals who settle abroad or take citizenship of another country.
Rules for Missing or Presumed Dead Subscribers
Clear guidelines have been issued for cases where an NPS subscriber is missing or presumed dead.
In such cases:
The nominee or legal heir will receive 20% of the total deposited amount immediately as interim relief.
The remaining 80% will stay invested and will be paid once the subscriber is officially declared missing or dead under the Indian Evidence Act, 2023.
Stronger Account-Centric Approach
The term “Permanent Retirement Account” has been replaced with “Each Individual Pension Account.”
This change strengthens account-level ownership and management, especially for subscribers holding multiple NPS accounts.
Each account will now be managed separately and more clearly.
