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Retirement

NPS exit and withdrawal rules

The December 2025 amendment: 80% lump sum, 20% annuity minimum, SLW and SUR.

PFRDA's Exits and Withdrawals (Amendment) Regulations, 2025 — notified 16 December 2025 — rewrote how a National Pension System corpus is paid out. The lump-sum share rose from 60% to 80% for most non-government subscribers, the ₹5 lakh closure threshold became a graded ₹8–12 lakh structure, and the Systematic Lump Sum Withdrawal (SLW) got first-class status. This guide tracks those rules with the regulation text behind every claim.

What changed in December 2025

For a non-government subscriber exiting normally with a corpus above ₹12 lakh, up to 80% can now be taken as lump sum and at least 20% must buy an annuity — the old 60/40 split still applies to government-sector subscribers. If the corpus is ₹8 lakh or less, the whole amount can be taken in one lump sum, or drawn through SLW or a Scheme for Unique Accelerated Withdrawal (SUR). Between ₹8 and ₹12 lakh, up to ₹6 lakh can be taken as lump sum with the balance moving to SUR for at least six years.

Vesting, age and partial withdrawals

All-Citizen model subscribers now vest after 15 years of contribution or at age 60, whichever comes earlier, the premature-exit lock-in was dropped, and entry or exit is allowed up to age 85. Partial withdrawals keep the 25% cap on your own contributions, with the interval between withdrawals shortened to four years before age 60 and three years after. The old 15-day notification requirement is gone: the account continues automatically unless you act.

The tax catch in the bigger lump sum

The 80% permission is a PFRDA rule; the Income-tax Act still exempts only 60% of the corpus at exit under section 10(12A). If you take more than 60% as lump sum, the excess is taxed at your slab. Annuity income is taxed as income whenever it is received, and partial withdrawals remain exempt under section 80CCD(5). Plan the split with that 60% line in view, not the 80% line.

SLW: a salary you schedule yourself

Instead of transferring the lump-sum portion at once, SLW pays it out at a frequency you choose (monthly, quarterly, half-yearly or yearly) from a fund of your selection, while the undrawn portion stays invested. The NPS Trust's SLW FAQ booklet describes the mechanics; the amount and frequency are yours to set, and the money is still market-linked while it waits.

Project an NPS corpus, then plan its drawdown →

Questions on nps exit and withdrawal rules

Can I take 80% of my NPS corpus as lump sum without any tax?

No. The 80% is what PFRDA allows; the Income-tax Act exempts only 60% of the corpus at exit under section 10(12A). Anything above 60% taken as lump sum is taxed at your slab, and the annuity is taxable as income. Only the first 60% is tax-free.

What happens if my NPS corpus is under ₹12 lakh?

Up to ₹8 lakh, the entire corpus can be withdrawn as a single lump sum, or drawn through SLW or SUR. Between ₹8 and ₹12 lakh, up to ₹6 lakh can be taken as lump sum and the balance must go into SUR for at least six years. Above ₹12 lakh, up to 80% lump sum with at least 20% annuity applies.

Do government employees get the same 80% lump sum?

No. The government sector keeps its 60% lump sum / 40% annuity structure at superannuation. The 80% flexibility applies to non-government (All-Citizen and corporate) subscribers exiting normally with a corpus above ₹12 lakh.

Educational, not advisory — and never a projection. LetsInvest is a research publication, not a SEBI-registered investment adviser, and we run no live rates or returns feed. The withdrawal planner and corpus check are illustrations of numbers you enter. Confirm anything that matters with the scheme's own authority (PFRDA, EPFO, the post office or your fund house) before you act.

Sources

Reviewed 24 Sept 2026. Rates are notified quarterly and rules change — PFRDA, EPFO, India Post and the Department of Economic Affairs are the authority, and this hub links straight to them.