New NPS Rules 2025: Exit, Withdrawal, And Age-Limit Changes Explained

The PFRDA has amended the “Exits and Withdrawals” rules for the National Pension System. The changes are largely focused on non-government subscribers (All Citizen Model and Corporate NPS). The NPS update intent is clear. It offers more flexibility, more choice, and easier exit planning, while still keeping the pension element intact through annuity requirements.

At normal exit, non-government subscribers can now take up to 80% as a lump sum, and need to allocate at least 20% to annuity. Along with that, PFRDA has introduced new corpus slabs, systematic withdrawal options, and a higher age limit (up to 85). The update also establishes clearer rules for partial withdrawals and financial assistance against the NPS account (lien/charge framework).

Let’s have a closer look about the new NPS updates and how they impact the pension system. 

What Exactly Changed In The New NPS Rules?

The changes are amendments to the PFRDA (Exits and Withdrawals under NPS) Regulations, 2015, and are presented as a structured set of “earlier vs revised” rules.

The Key New NPS Updates Are:

• More lump sum at normal exit for non-government subscribers (up to 80%)
• New withdrawal “slabs” based on how large your retirement corpus is
• Systematic withdrawal options (SLW / SUR) added as structured alternatives to taking everything at once
• Entry and exit age raised to 85, plus easier continuation (the “15-day prior intimation” requirement is removed)
• Partial withdrawal rules updated, including frequency and medical purpose expansion
• Financial assistance framework introduced via lien/charge marking (up to 25% of your own contribution, within limits)

Which NPS Subscribers Do These Changes Apply To?

These amendments are primarily aimed at the non-government sector, meaning All Citizen Model and Corporate Sector subscribers. At the same time, some provisions are rationalised for the Government sector. Not everything changes for government subscribers, but some slab-based options and process improvements do appear.

Before you interpret any “new rule”. Confirm your subscriber category—Government, All Citizen, or Corporate.

What Are the New Exit Options At 60 For Non-Government Subscribers?

1. The New Default: Up To 80% Lump Sum + At Least 20% Annuitya

If you are in the All Citizen Model or Corporate NPS, the normal exit rule has moved from up to 60% lump sum with at least 40% annuity to up to 80% lump sum with at least 20% annuity.

2. New Corpus Slabs: Smaller Corpuses Get More Choices

PFRDA has also expanded the “full withdrawal” comfort zone and added structured choices based on your corpus size: 

• If corpus is up to ₹8 lakh: you can take 100% lump sum, or choose SLW/SUR, or follow the 80/20 route
• If corpus is above ₹8 lakh and up to ₹12 lakh: you can take up to ₹6 lakh as lump sum, and take the balance via SUR (minimum 6 years) or annuity, or follow 80/20
• If corpus is above ₹12 lakh: the general 80/20 rule applies

3. What Do SLW And SUR Actually Mean For A Retiree?

These options exist for one practical reason. Many retirees don’t want to make a single irreversible choice on day one.

With a pure lump sum, money exits the NPS system immediately. With an annuity-heavy approach, you lock a chunk of your corpus into an annuity product for regular pension. With systematic withdrawal (SLW / SUR), you withdraw in a planned, phased way instead of taking everything at once.

If you are nearing retirement, these should be your key planning questions. Do you need a large amount immediately? Do you want controlled withdrawals while the remaining corpus stays invested?

Premature Exit From NPS: What Are the Rules?

A premature exit from NPS means exiting the system before reaching the normal exit age of 60 years. The rules for premature exit are stricter than normal retirement exits, as NPS is designed primarily as a long-term pension product.

If an All Citizen Model or Corporate NPS subscriber chooses to exit before age 60, the following rules apply:

• Up to 20% of the total pension corpus can be withdrawn as a lump sum.
• At least 80% of the corpus must be used to purchase an annuity, which will provide a regular pension.

This structure ensures that even in early exit scenarios, the pension objective of NPS is preserved.

Exception for Small Corpus (Up to ₹2.5 Lakh)

If the total accumulated pension corpus is ₹2.5 lakh or less, the subscriber is allowed to:

• Withdraw 100% of the corpus as a lump sum, and
• Annuity purchase is not mandatory in such cases.

This exception is intended to reduce administrative burden and provide liquidity where the corpus size is too small to generate a meaningful pension.

Minimum Subscription Period Condition

• Premature exit is permitted only after completing a minimum of 5 years of subscription under NPS.
• If the subscriber exits before completing 5 years, the entire corpus must generally be used to purchase an annuity (subject to applicable regulations).

Premature Exit Due to Death of the Subscriber

In the unfortunate event of the death of an NPS subscriber:

• 100% of the accumulated pension corpus is payable to the nominee or legal heir.
• There is no mandatory requirement to purchase an annuity, though nominees may choose to do so voluntarily if they wish to receive a regular pension.

What Changed In Age Limit, Continuation, And Partial Withdrawals?

1. Entry and Exit Age Increased to 85

Earlier, max entry was 70 and exit up to 75. Now, both entry and exit age have been increased to 85. This is useful for people who start late or want to keep the corpus invested longer.

2. Automatic Continuation Made Simpler

The earlier requirement of giving 15 days prior intimation for continuation or deferment has been removed. This reduces paperwork and friction at the decision point.

3. Partial Withdrawal: More Structure, Wider Medical Coverage

Key updates include:

• Frequency increased to 4 times, with a 4-year interval between two withdrawals (as applicable before exit)
• Medical purpose broadened to medical treatment/hospitalisation without sticking to a fixed list of critical illnesses
• Purchase or construction residential house permitted, if subscriber doesn’t already own a house, excluding the ancestral property
• Purposes like skill development and starting a venture are removed from partial withdrawal purposes

4. Financial Assistance Against Pension Corpus (Lien/Charge Concept)

This is easy to misunderstand. It does not mean “NPS gives you a loan.” The rule allows a subscriber to seek financial assistance from a regulated financial institution. The lender may mark a lien/charge on the NPS account up to 25% of the subscriber’s own contribution, within the permitted limits and subject to guidelines.

What Should You Do Now If This Is the Latest Update?

Here’s a simple way to act on the new rules:

1. Confirm your subscriber type (Government vs All Citizen vs Corporate)
2. Estimate your corpus slab (up to ₹8 lakh / ₹8–₹12 lakh / above ₹12 lakh)
3. Decide your exit style: higher lump sum, minimum annuity, or systematic withdrawal (SLW/SUR)
4. If you are planning partial withdrawals, align them to permitted purposes and timing
5. If you are close to exit, review your plan early through your CRA/POP or employer (for Corporate)

A quick tax caution. Don’t assume any extra lump sum is automatically tax-free just because withdrawal limits changed. Tax outcomes depend on the tax law and your withdrawal structure.