Pension rules, charges and 2026 changes
NPS exit and withdrawal rules after the December 2025 amendment — 80% lump sum, 20% annuity
The new NPS exit rules explained: normal exit, premature exit, corpus slabs of ₹5, ₹8 and ₹12 lakh, government vs private subscribers, partial withdrawals and deferral to 85.
Since PFRDA amended its exit regulations in December 2025, most non-government NPS subscribers who exit normally (at 60, or after the qualifying period) can take up to 80% of the corpus as a lump sum and must use at least 20% to buy an annuity. The old rule was 60% lump sum and 40% annuity. If the total corpus is ₹8 lakh or less, all of it can be withdrawn. Between ₹8 lakh and ₹12 lakh, up to ₹6 lakh can be taken as a lump sum and the rest goes to an annuity or a systematic withdrawal spread over at least six years. Government sector subscribers keep the 60:40 split. Premature exit before 60 remains strict: above ₹5 lakh, at least 80% must buy an annuity. These figures come from the PFRDA (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025, published in the Gazette on 16 December 2025 (regulations 3, 4 and 8 of the consolidated 2015 regulations on PFRDA's website); confirm the slab that applies to you with your CRA before you submit an exit request.
Normal exit for non-government subscribers
| Total corpus at exit | Lump sum | Annuity or other payout |
|---|---|---|
| ₹8 lakh or less | Up to 100% | None required |
| Above ₹8 lakh up to ₹12 lakh | Up to ₹6 lakh | Balance: annuity or systematic withdrawal over at least 6 years |
| Above ₹12 lakh | Up to 80% | At least 20% in an annuity |
"Normal exit" for a non-government subscriber means exit at age 60 (superannuation) or, under the amended rules, after 15 years in NPS (regulation 4(1)(a); this 15-year route does not apply to an employment-linked scheme). People who joined NPS after 60 can withdraw fully if the corpus is ₹12 lakh or less (regulation 4(1)(e)).
Worked example (illustrative). Priya, a private-sector employee, exits at 60 with a Tier I corpus of ₹40 lakh. She can take up to ₹32 lakh as a lump sum and must buy an annuity with at least ₹8 lakh. At an illustrative annuity rate of 6.5%, ₹8 lakh buys about ₹52,000 a year, or ₹4,333 a month. If she chooses to annuitise 40% (₹16 lakh) instead, her pension would be about ₹8,667 a month. Use the annuity pension calculator to test your own split.
Government sector subscribers
| Total corpus at exit | Lump sum | Annuity or other payout |
|---|---|---|
| ₹8 lakh or less | Up to 100% | None required |
| Above ₹8 lakh up to ₹12 lakh | Up to ₹6 lakh | Balance as annuity or systematic withdrawal |
| Above ₹12 lakh | Up to 60% | At least 40% in an annuity |
For central government employees who opted into UPS, the payout follows UPS rules instead; see the UPS guide.
Premature exit (before 60, without the qualifying period)
| Corpus | What happens |
|---|---|
| ₹5 lakh or less | Up to 100% can be withdrawn |
| Above ₹5 lakh | Up to 20% lump sum; at least 80% must buy an annuity |
The amended regulation 4(1)(b) no longer sets a minimum period before a non-government subscriber can exit prematurely. Because 80% of a larger corpus is locked into an annuity on premature exit, it is usually better to stay invested or use partial withdrawals instead.
Partial withdrawals while invested
- Capped at 25% of your own contributions (not employer contributions or returns).
- Allowed for specified purposes such as children's education or marriage, buying or building a first house, treatment of specified illnesses, disability, and some others listed by PFRDA.
- You must have been in NPS for at least three years. The amended rules allow up to four partial withdrawals before 60 (or superannuation, if later), with a minimum gap of four years, and withdrawals at three-year intervals after 60 for those who stay invested (regulation 8).
Deferral and staying invested
You no longer have to exit at 60. Both government and non-government subscribers can defer the lump sum and the annuity purchase up to age 85, and keep contributing. Deferral can help if markets have just fallen or if you have other income. But the annuity rate on offer depends on age and interest rates at the time you buy, so waiting is not automatically better.
Death and incapacity
On the death of a subscriber, the full corpus is generally paid to the nominee or legal heirs, who can also choose to buy an annuity. For government employees, invalidation or physical incapacity certified as preventing further work is treated as a normal exit. Check the death-claim forms and documents with your CRA, because claims by nominees are where missing nomination and KYC cause the longest delays.
Loans against NPS
Since the December 2025 changes, a partial withdrawal can be used to settle a loan taken from a regulated financial institution against a lien or charge marked on your NPS account (regulation 8(1)(A)(h)). PFRDA's summary puts the lien at up to 25% of your own contributions, with separate guidelines to follow. Any such loan should be treated with caution: if it is not repaid, the lender can be paid from your retirement savings.
Tax at exit — a short note
Tax rules are outside this site's main scope. Historically, 60% of the lump sum at NPS exit was exempt and the annuity income is taxed as income when received. Whether the extra 20% now available as a lump sum is also exempt depends on the current Income-tax Act provisions, which we could not confirm from an official text; do not assume it is tax-free. Check with a tax professional or the Income Tax Department before you decide how much to take.
Step by step: exiting NPS
- Update KYC, bank account and nominee details with your CRA at least three months before exit.
- Decide the lump-sum share, the annuity share and whether to defer.
- Get annuity quotes for the options you are considering; see annuity options.
- Submit the exit request online through the CRA (or through your nodal office if you are a government employee).
- Track it and keep the request number; if it stalls, use the NPS grievance route.
Back to the 2026 overview, or read NPS Tier I and Tier II.
Frequently asked questions
Is the 40% annuity rule gone?
For most non-government subscribers at normal exit, the minimum is now 20%. Government sector subscribers still have to annuitise at least 40% of a corpus above ₹12 lakh.
Can I annuitise more than the minimum?
Yes. You can choose a larger annuity share if you want more guaranteed lifetime income.
What if my corpus is ₹10 lakh?
In the ₹8–12 lakh band you can take up to ₹6 lakh as a lump sum and the balance (₹4 lakh) as an annuity or as systematic withdrawals spread over at least six years.
Do these rules apply to people who joined NPS long ago?
The amended exit regulations apply to exits after they came into force, regardless of when you joined. Check whether any transitional provision applies to you.
