New NPS rules: From exit age to withdrawal of funds, know what changes have been made so far..

The government has made significant changes to the rules governing the National Pension System (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) has implemented new exit and withdrawal rules in 2025, aimed at providing government employees with greater flexibility and better options at retirement. These changes have made pension planning more flexible and easier than ever before.

NPS participation extended to age 85
The biggest change is that government NPS subscribers can now continue investing in their NPS accounts until the age of 85, instead of 75. This means their money can continue to grow for a longer period after retirement. Upon reaching the age of 85, subscribers must invest at least 40 percent of their total corpus in an annuity to receive a regular pension. The remaining amount can be withdrawn as a lump sum or in installments.

100% withdrawal facility for small corpus amounts
Another major relief for government employees is that they can now withdraw their entire NPS corpus up to Rs. 8 lakh at retirement. Previously, this limit was only Rs. 5 lakh. This means that employees with smaller retirement funds will not be forced to purchase an annuity and can withdraw the entire amount at once.

New options for corpus amounts between Rs. 8 and 12 lakh
If a government employee's NPS corpus is more than Rs. 8 lakh but less than or equal to Rs. 12 lakh, they will now have several options. They can withdraw up to Rs. 6 lakh as a lump sum and receive the remaining amount in installments or purchase an annuity with it. Alternatively, they can withdraw 60 percent of the total corpus as a lump sum and use the remaining 40 percent to arrange for a pension.

Introduction of Systematic Unit Redemption
For the first time, the option of Systematic Unit Redemption (SUR) has been added to the NPS. Under this, subscribers can regularly withdraw money by selling a certain number of units of their investment at a fixed interval. This is beneficial for those who do not want to withdraw a large sum at once and prefer to use the funds gradually. This reduces the fear of running out of money even after a long life.

Greater Security for the Family in Case of Death
The new rules also clarify that if an NPS subscriber dies and their corpus is between Rs. 8 and 12 lakh, the nominee can withdraw up to Rs. 6 lakh as a lump sum. The remaining amount can be received through a Systematic Withdrawal Plan (SWP). This provides immediate financial assistance to the family and also ensures future security.

Rules for Employees Who Are Missing or Presumed Dead
If an NPS subscriber goes missing, their nominee or legal heir will be given 20 percent of the total accumulated amount as immediate relief. The remaining 80 percent will be kept safe and will be disbursed after the person is declared dead under the law. This will provide financial support to the family during the initial period.

Why These Changes Are Important
These new NPS rules give government employees more options, greater flexibility, and more control after retirement. Long-term investment, higher withdrawal limits, and new options like SWP make retirement planning more robust than ever before.

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