The Pension Fund Regulatory and Development Authority (PFRDA) has recently announced significant changes to the exit and withdrawal rules of the National Pension System (NPS), aiming to provide greater flexibility and liquidity to subscribers. These changes, outlined in the PFRDA (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025, which took effect immediately after publication, address several key aspects of NPS exits, impacting both government and non-government subscribers. Here's a breakdown of the ten most important changes you should know:

1. Extended Investment Tenure: NPS subscribers can now remain invested in the system until the age of 85, providing an extended period for wealth accumulation based on individual retirement planning needs.

2. Revised Normal Exit Conditions: For non-government sector subscribers under the Common Scheme and Multiple Scheme Framework, normal exit is permitted upon completing 15 years of subscription, attaining the age of 60, or upon superannuation/retirement, whichever comes earlier.

3. Removal of Mandatory Five-Year Lock-in (Non-Government): The amendment eliminates the mandatory five-year lock-in period for non-government NPS subscribers, offering increased flexibility for those needing to exit due to changing circumstances. However, government sector NPS subscribers continue to be subject to the five-year lock-in requirement.

4. Modified Annuitization Requirements: The regulations revise the annuitization requirements based on the accumulated pension corpus: * Corpus exceeding ₹12 lakh: A minimum of 20% must be used for annuity purchase, with the remaining amount up to 80% available for lump-sum withdrawal. * Corpus up to ₹8 lakh: The entire amount can be withdrawn as a lump sum. * Corpus between ₹8 lakh and ₹12 lakh: Lump-sum withdrawal of up to ₹6 lakh is allowed, with the remaining amount used to purchase an annuity with a minimum tenure of six years.

5. Premature Exit Provisions: In case of premature exit, at least 80% of the accumulated corpus must be utilized for annuity purchase. The remaining balance may be withdrawn as a lump sum. If the total corpus is less than ₹5 lakh, the subscriber may withdraw the entire amount as a lump sum.

6. Deferment Options: Subscribers can now defer both lump-sum withdrawals and annuity purchases until the age of 85, providing greater control over the timing of exits.

7. Financial Assistance Against NPS Corpus: Subscribers can now avail financial assistance from regulated financial institutions, with lenders permitted to mark a lien or charge on the individual pension account. However, this is restricted to 25% of the subscriber's own contribution.

8. Relaxed Partial Withdrawal Rules: The permitted purposes for partial withdrawal have been rationalized. The scope of withdrawals for medical needs has been widened to include treatment or hospitalization of the subscriber, spouse, children, or parents, without a specific disease list.

9. Vesting Period Revision: For normal exit, the vesting period has been revised to 15 years or any higher period specified under a scheme, or until the subscriber attains 60 years of age, whichever is earlier, replacing the previous requirement of vesting until age 60.

10. Clarification on Death and Missing Subscriber Scenarios: The amendments clarify the procedures for death and missing subscriber scenarios. Nominees or legal heirs are entitled to interim relief of 20% of the corpus when a subscriber is declared missing.

These revamped NPS exit rules aim to provide subscribers with more control over their retirement savings, offering greater flexibility and ease of access while ensuring a secure post-retirement income stream. The changes reflect PFRDA's commitment to adapting the NPS to the evolving needs and expectations of its subscribers.