The Pension Fund Regulatory and Development Authority (PFRDA) has issued a major notification on 12 December 2025, bringing comprehensive changes to the Exit and Withdrawal rules under the National Pension System (NPS). These amendments significantly impact government employees, private sector employees, corporate subscribers, All Citizen model subscribers, and NPS-Lite/Swavalamban subscribers.
This article explains the PFRDA (Exits and Withdrawals under NPS) Amendment Regulations, 2025 in simple, reader-friendly language, highlighting what has changed, who will benefit, and how subscribers should plan their retirement accordingly.
About the Amendment Notification
The amendment has been notified by Pension Fund Regulatory and Development Authority under powers granted by the PFRDA Act, 2013.
These revised regulations amend the earlier 2015 Exit and Withdrawal Regulations and will come into force from the date of publication in the Official Gazette.
Key Objective of the 2025 Amendment
The primary goals of the amendment are:
- Greater flexibility in exit and withdrawal
- Clear distinction between government and non-government subscribers
- Enhanced lump sum withdrawal limits
- Introduction of systematic withdrawals and deferment options
- Stronger protection for nominees and legal heirs
- Alignment with Bharatiya Sakshya Adhiniyam, 2023
Important Definition Changes You Must Know
1. Exit Redefined
“Exit” now clearly includes:
- Retirement or superannuation
- Completion of minimum subscription period
- Premature closure
- Death or missing subscriber presumed dead
Each individual pension account is treated separately, even if a subscriber holds multiple accounts.
2. New Term – Deferment
Defer / Deferment means postponing:
- Lump sum withdrawal, or
- Purchase of annuity
Subscribers can defer withdrawals up to the age of 85 years.
Subscriber Categories Under NPS
Under the revised rules, NPS subscribers are classified as:
- Government Sector Subscribers
- Non-Government Sector Subscribers
- NPS-Lite and Swavalamban Subscribers
Each category has distinct exit and withdrawal rules.
Exit Rules for Government Sector Subscribers
On Superannuation or Retirement
- Minimum 40% of pension wealth must be used to purchase annuity
- Balance can be taken as lump sum or systematic withdrawal
- Full flexibility allowed till 85 years of age
Special Relaxation Based on Pension Corpus:
- Up to ₹8 lakh → 100% lump sum allowed
- ₹8–12 lakh → Up to ₹6 lakh lump sum, rest via annuity or systematic withdrawal
- Above ₹12 lakh → Max 60% lump sum, minimum 40% annuity
On Resignation / Dismissal
- Minimum 80% annuity mandatory
- If total corpus ≤ ₹5 lakh, full lump sum allowed
On Death of Subscriber
- Same structure as retirement
- Nominees/legal heirs get enhanced withdrawal choices
- Default annuity ensures lifetime family pension
Exit Rules for Non-Government Sector Subscribers
Applicable to All Citizen Model and Corporate Sector subscribers.
Normal Exit (After 15 Years or Age 60)
- Minimum 20% annuity
- Balance via lump sum or systematic withdrawal
- Full lump sum allowed if corpus ≤ ₹8 lakh
Premature Exit
- Minimum 80% annuity
- Full withdrawal allowed if corpus ≤ ₹5 lakh
On Death
- Entire corpus payable to nominee/legal heir
- Option for lump sum, annuity, or systematic withdrawal
New Provisions Introduced in 2025
1. Exit for Specific Purpose Schemes
Subscribers of special NPS schemes will follow scheme-specific guidelines issued by PFRDA.
2. Exit on Renunciation of Indian Citizenship
- Subscriber can close NPS account
- 100% lump sum withdrawal allowed
3. Exit for Missing and Presumed Dead Subscribers
- 20% interim relief paid to nominee/legal heir
- Remaining 80% paid after legal declaration under Bharatiya Sakshya Adhiniyam, 2023
Major Changes in Partial Withdrawal Rules
- Partial withdrawal capped at 25% of own contribution
- Allowed up to 4 times before age 60
- After age 60, withdrawal allowed every 3 years
- New permitted purpose:
- Settlement of loans taken against NPS account
Why These Amendments Are Important
✔ Higher retirement flexibility
✔ Better protection for family members
✔ Increased lump sum limits
✔ Clearer and simplified exit framework
✔ Long-term financial security up to age 85
Final Takeaway
The PFRDA NPS Exit and Withdrawal Amendment Regulations, 2025 mark a major reform in India’s pension ecosystem. These changes empower subscribers with more choice, higher liquidity, and stronger retirement planning tools, while still ensuring long-term pension security.
If you are an NPS subscriber, understanding these rules is crucial for making smart retirement decisions.