PFRDA revamps NPS exit and withdrawal rules, allows subscribers to stay invested until 85

The Pension Fund Regulatory and Development Authority (PFRDA) has announced extensive changes to the rules governing exits and withdrawals under the National Pension System (NPS), providing subscribers with greater flexibility in how and when they can access their retirement savings, according to the notification published in the Gazette of India on December 12, 2025.

According to the notification, the new rules — the PFRDA (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025 — take effect immediately upon publication and replace several key provisions of the 2015 regulations.

Under the amended regulations, subscribers across the government, non-government, and NPS-Lite categories can stay invested in the NPS until age 85 unless they choose to exit earlier under the prescribed conditions. The notification also clarifies provisions for deferment. According to PFRDA, subscribers can now delay both lump-sum withdrawals and annuity purchases until age 85. Previously, the rules were more strict regarding exit timelines and annuity purchases.

For subscribers, the notification states that at least 40% of their accumulated pension wealth must be used to purchase an annuity upon retirement. The remaining amount can be taken as a lump sum or through periodic withdrawals. However, if the total pension wealth does not exceed ₹8 lakh, the subscriber may withdraw the entire amount without purchasing an annuity, according to the rules.

Under the amended framework, employees with pension wealth between ₹8 lakh and ₹12 lakh can withdraw up to ₹6 lakh as a lump sum, with the remaining amount to be used for annuity or systematic withdrawals for at least six years. For pension wealth exceeding ₹12 lakh, up to 60% may be withdrawn, with at least 40% earmarked for annuity purchases.

A significant new feature, according to PFRDA, is the introduction of detailed rules for subscribers who are missing and presumed dead under the Bharatiya Sakshya Adhiniyam, 2023.

Another notable change, according to the notification, is the explicit recognition of liens and charges on NPS accounts. Subscribers can now use their pension wealth as collateral to obtain loans from regulated financial institutions, within the limits specified by PFRDA.

Furthermore, the rules also establish a specific exit provision for subscribers who renounce Indian citizenship. According to the notification, such subscribers may close their NPS account and withdraw the entire accumulated pension wealth in a single transaction, in accordance with the authority's guidelines.