The National Pension Scheme (NPS), regulated by the PFRDA (Pension Fund Regulatory and Development Authority), is designed as a long-term retirement savings scheme. Though in most cases, subscribers are required to use a significant portion of their accumulated corpus to buy an annuity, there are some situations in which subscribers can withdraw their full NPS corpus.
According to the latest PFRDA amendments, all NPS subscribers, including government and non-government subscribers, can withdraw their entire corpus at retirement (age 60 or later if the total NPS corpus does not exceed Rs 8 Lakh. The threshold was Rs 5 lakh before the amended regulations.
In the case of premature exit (before age 60), 100 per cent withdrawal is allowed only if the subscriber has completed at least five years in the NPS and the corpus is up to 5 lakh. Upon the death of the subscriber, the entire corpus is payable to the nominee or legal heir, irrespective of the amount.
| Situation | When 100% Withdrawal Is Allowed | Corpus Limit | Key Condition |
| Retirement | At Age 60 Or Later | Up To Rs 8 Lakh | Limit Increased
From 5 Lakh To Rs 8 Lakh |
| Premature Exit | Before Age 60 | Up To Rs 5 Lakh | There Is A 5 Year Lock-In.
Which May Not Apply In Some Cases |
| Death Of Subscriber | At Any Age` | No Limit | Entire Corpus Paid
To The Legal Heir |
For the NPS corpus exceeding Rs 8 Lakh
If the corpus exceeds Rs 8 Lakh, the annuitisation requirements differ based on the subscriber category.
Non-government subscribers with a corpus between Rs 8 Lakh and Rs 12 Lakh can withdraw up to Rs 6 Lakh lump sum, and the rest phased out or partially annuitised as per new structured options, and for corpus exceeding Rs 12 Lakh, at least 20 percent must be used to purchase an annuity, while up to 80 percent can be withdrawn as a lump sum (though only 60 percent is tax-exempt).
For government employees, if the corpus exceeds Rs 8 Lakh, at least 40 per cent must be used for annuity purchase, while up to 60 per cent can be withdrawn.
Voluntary/Premature Exit
According to Rule 4(1)(b) of the PFRDA Exit Regulations, a subscriber is eligible for voluntary premature exit only after completing a minimum of five years of subscription. A subscriber may withdraw the whole corpus only if the total amount does not exceed Rs 5 lakh. If the corpus exceeds Rs 5 lakh, at least 8 per cent of the accumulated amount must be utilised for the purchase of an annuity, with only the remaining portion permitted to be withdrawn as a lump sum.
In the case of a subscriber’s death, the entire corpus, irrespective of the amount, can be withdrawn by their nominee or legal heir in a single payment.
