New NPS Rules: Now you can invest until the age of 85, and receive more cash upon retirement..

NPS New Rules 2025: If you invest in the National Pension System (NPS) or are planning to, this news is very important for you. The pension fund regulator PFRDA has made 10 major changes to the NPS rules, aimed at giving subscribers more flexibility, more cash, and better retirement planning options. These new rules will apply to employees in both the government and private sectors.

These changes can prove beneficial for salaried individuals. Let's understand the new NPS rules and their benefits in simple terms...

1. Increased Age Limit
Now you can remain invested in NPS until the age of 85. Earlier, this limit was 75 years. This will provide older investors with the facility to invest and withdraw for a longer period.

2. Reduced Investment Limit in Annuity
According to the new rules, private sector employees will only have to invest 20% of their total accumulated amount in a pension (annuity). Previously, the rule was that if your fund was more than Rs. 5 lakh, you had to invest at least 40% of the money in an annuity. This change will result in more cash in hand at the time of retirement, which you can use for your needs.

3. Option to Withdraw the Entire Amount Up to Rs. 8 Lakh
Both government and private sector subscribers whose total fund is Rs. 8 lakh or less can withdraw 100% of the money in a lump sum.

4. New Option for Withdrawal in Installments
PFRDA has introduced the SUR (Systematic Unit Redemption) facility, similar to mutual funds. Those whose fund is between Rs. 8 and 12 lakh can withdraw up to Rs. 6 lakh in a lump sum and the remaining amount in installments.

5. New Options for Those with Funds Between Rs. 8-12 Lakh
These changes are significant for subscribers whose NPS fund is between Rs. 8 lakh and Rs. 12 lakh. In such cases, government employees will get three different options for withdrawing money at retirement. The first option would be for them to withdraw ₹6 lakh in a lump sum and receive the remaining amount in installments (through SUR) for at least 6 years.
In the second option, the employee can take ₹6 lakh in cash and purchase a pension plan (annuity) with the remaining amount.

The third option would be to take 60% of their total retirement fund as tax-free cash and purchase an annuity with at least 40% of the amount.
For private sector employees, the first two options remain the same. In addition, they have the option to withdraw 80% of their total fund in cash, while purchasing an annuity with only 20% of the amount is mandatory.

6. Increased limit for partial withdrawals
Now, money can be withdrawn up to 4 times before the age of 60. Earlier, this limit was 3 times. There should be a gap of at least 4 years between any two withdrawals.

7. Withdrawals are possible even after retirement
Those who continue in NPS even after the age of 60 can withdraw up to 25% of the accumulated amount. A gap of 3 years is required between two withdrawals.

8. Full withdrawal upon relinquishing citizenship
If a subscriber relinquishes Indian citizenship, they can withdraw the entire accumulated amount in a lump sum.

9. Interim relief for missing subscribers
If a subscriber is declared missing or deceased, the nominee will receive 20% of the fund immediately. The remaining 80% will be released after the completion of legal formalities.

10. New account name
The term "Permanent Retirement Account" will now be replaced with "Individual Pension Account" to make the account identification clearer.

These 10 changes to NPS give investors more freedom and the ability to withdraw money as per their needs. The new rules make retirement planning easier.

Disclaimer: This content has been sourced and edited from Navbharat Times. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.