Finin2min | NPS 2025 Exit & Withdrawal Reforms

More flexibility. Corpus-driven exits. Fewer lock-in

Regulatory basis:
Amendments notified on 16 December 2025 under the PFRDA (Exits and Withdrawals under NPS) Amendment Regulations, 2025 by Pension Fund Regulatory and Development Authority (PFRDA).

1️⃣ What Changed in One Snapshot

Area	Pre-2025	Post-2025 (Now)
Exit rules	Age & tenure driven	Corpus-linked & flexible
Premature exit lock-in	5 years mandatory	Removed (All-Citizen)
Joining after 60	3-year vesting	Vesting removed
Nominee withdrawal	Lump-sum only	Staggered allowed (SLW/SUR)
Full withdrawal (premature)	≤ ₹2.5 lakh	≤ ₹5 lakh

2️⃣ Who Is Covered (NPS Models)

Model	Who it applies to
All-Citizen Model	Individuals (18–70): self-employed, freelancers, others
Corporate Sector Model	Employees of PFRDA-registered corporates
Government Employees	Central/State Govt employees (joined ≥ 1 Jan 2004)

3️⃣ All-Citizen Model — Key Liberalisations

Change	New Rule
5-year lock-in for premature exit	Removed
Vesting for joining after 60	Removed
Exit before 60	Allowed after 15 years in NPS

📌 Impact: Age is no longer a hard barrier; tenure + corpus matter more.

4️⃣ Exit Rules Based on Corpus Size (All-Citizen & Corporate)

A. Corpus ≤ ₹8 lakh

Option	Permitted
Full lump sum	✅
Up to 80% lump sum / SLW	✅
Mandatory annuity	Up to 20%

B. Corpus > ₹8 lakh and ≤ ₹12 lakh

Option	Rule
Lump sum at exit	₹6 lakh max
Balance withdrawal	SLW / SUR over ≥ 6 years
Annuity requirement	❌ Not mandatory
Alternative route	80% lump sum + 20% annuity

📌 Flexibility window created for mid-size corpus holders.

C. Corpus > ₹12 lakh

Component	Rule
Lump sum / SLW / SUR	Up to 80%
Mandatory annuity	Minimum 20%

5️⃣ Premature Exit (Before Normal Exit Conditions)

Corpus at Premature Exit	Withdrawal Rule
≤ ₹5 lakh	100% lump sum or SLW/SUR allowed
> ₹5 lakh	20% lump sum + 80% annuity mandatory

📌 Threshold enhanced from ₹2.5 lakh → ₹5 lakh.

6️⃣ Nominee / Legal Heir — Death of Subscriber

Earlier Rule	New Rule (w.e.f. 1 Oct 2025)
Lump-sum only	SLW / SUR permitted
One-time withdrawal	Staggered withdrawal allowed

📌 Improves cash-flow planning for nominees.

7️⃣ Government Employees — What Remains Different

Aspect	Government Employees
Lump sum at exit	60% (fixed)
Mandatory annuity	40% (fixed)
Other exit rules	Aligned with All-Citizen model

📌 Wherever All-Citizen allows 80:20, Govt employees remain 60:40.

8️⃣ Partial Withdrawals (All Models)

Feature	Rule
Withdrawal limit	Up to 25% of own contribution
Purpose	Specified purposes only
Frequency	Multiple, subject to rules
Account closure	❌ Not required
Long-term participation	Not impacted

9️⃣ Common Rules Across All NPS Models

Area	Rule
Exit structure	Corpus-linked
Withdrawal modes	Lump sum / SLW / SUR / annuity
Continuation age	Up to 85 years
Nominee flexibility	Enhanced

🔟 Finin2min Bottom Line

Old NPS Perception	New Reality
Rigid exit rules	Choice-driven exits
Age-restricted	Tenure + corpus based
Annuity heavy	Selective annuity mandate
Nominee rigidity	Flexible withdrawals

Final Finin2min Verdict

The 2025 NPS amendments fundamentally modernise exit rules, shifting the system from lock-in driven to lifecycle-friendly.
Subscribers now have real control over liquidity, timing, and structure, without diluting retirement discipline.

⚠️ Disclaimer

This guide is for educational purposes only, based on prevailing law, press releases, and FAQs as on date. It does not constitute professional advice. Users should evaluate facts case-by-case and consult advisors before investing.

Article related to –
NPS 2025 amendments explained
NPS exit and withdrawal rules 2025
PFRDA NPS reforms
NPS premature exit rules
NPS corpus based withdrawal
NPS annuity vs lump sum rules

Finin2min | NPS 2025 Exit & Withdrawal Reforms — Finin2min Explainer