NPS Rules Overhauled: Key Changes Allow Investments Up to Age 85 and 100% Withdrawals

New Delhi: The National Pension System (NPS) has undergone significant reforms aimed at making it more flexible and attractive for subscribers across the government, private, and NPS-Lite schemes. The Pension Fund Regulatory and Development Authority (PFRDA) has introduced changes that enhance retirement planning and provide greater control over withdrawals. Here are 10 major changes that NPS subscribers should know:

1. Investment Age Extended to 85 Years:
Subscribers can now continue investing in NPS until the age of 85, up from the previous limit of 75. This applies to both government and non-government subscribers, allowing more time to accumulate wealth for retirement.

2. Reduced Annuity Requirement:
Previously, subscribers had to use 40% of their accumulated corpus to purchase an annuity. Now, private sector subscribers need to allocate only 20%, making retirement planning more flexible.

3. 100% Corpus Withdrawal Option:
Subscribers with a corpus of ₹8 lakh or less can now withdraw 100% of their funds in one go, irrespective of conditions that earlier applied only to select cases.

4. Systematic Unit Redemption (SUR):
A new Systematic Unit Redemption facility allows subscribers to gradually withdraw funds in installments over at least six years, offering a controlled way to access retirement savings.

5. New Corpus Slabs:
Different rules now apply for corpuses up to ₹8 lakh and between ₹8–12 lakh, providing clarity on withdrawal limits and flexibility.

6. Multiple Withdrawals Before Age 60:
Subscribers can now make up to four partial withdrawals before the age of 60, an increase from the previous limit of three. However, there must be a minimum gap of four years between withdrawals.

7. Post-60 Partial Withdrawals:
Partial withdrawals after age 60 are allowed, provided there is a three-year gap between withdrawals and the withdrawal amount does not exceed 25% of the individual’s contributions.

8. Exit Option for Non-Resident Indians (NRIs):
NRIs can now close their NPS accounts and withdraw the full accumulated corpus, simplifying account management for those relocating abroad.

9. Exit in Case of Missing or Deceased Subscribers:
If a subscriber is missing or declared deceased, 20% of the corpus will be released immediately to the nominee or legal heir, while the remaining 80% continues to be invested until official declaration under the Indian Evidence Act, 2023.

10. Account-Centric Approach Strengthened:
The rules now emphasize individual account ownership, replacing terms like “Permanent Retirement Account” with a focus on per-account management, especially for subscribers with multiple accounts, ensuring clear and separate management.

These reforms make NPS more flexible, transparent, and subscriber-friendly, giving individuals greater control over their retirement funds while catering to diverse financial needs.

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