NPS Withdrawal Rules: Lump Sum, Annuity and Early Exit

Non-government NPS subscribers can take up to 80% of the corpus as a lump sum at normal exit and must use the rest to buy an annuity. With a corpus of ₹8 lakh or less, you can withdraw all of it. Government employees can take up to 60%, and an early exit pays at most 20% in cash unless the corpus is ₹5 lakh or less.

Key facts

These limits come from the PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015, as amended in December 2025. PFRDA notified the changes on 19 December 2025. The main change for private-sector subscribers was a lump sum limit raised from 60% to 80%, with the compulsory annuity cut from 40% to 20%.

Normal exit: how much you can take as cash

Normal exit means leaving after you become eligible. For the All Citizen Model, that is 15 years of subscription or age 60, whichever comes first. Corporate-sector and government subscribers become eligible at retirement or superannuation.

What you can withdraw depends on your accumulated pension wealth (the corpus) on the exit date.

NPS Trust’s FAQ gives worked figures for a non-government subscriber. With ₹13 lakh at exit, you can take up to ₹10.4 lakh and must put at least ₹2.6 lakh into an annuity. With ₹9 lakh, you can take ₹6 lakh and route ₹3 lakh through unit redemption or an annuity, or take up to ₹7.2 lakh and annuitise ₹1.8 lakh.

You also do not have to take the lump sum in one go. Systematic Lump Sum Withdrawal (SLW) pays a fixed amount at regular intervals. Systematic Unit Redemption (SUR) sells a fixed number of units each time.

If you joined after age 60

No vesting period applies, so you can take a normal exit at any time. You can withdraw everything if the corpus is up to ₹12 lakh. Above that, the 80% lump sum and 20% annuity split applies.

Premature exit before 60 or 15 years

You can leave before completing the vesting period. The December 2025 amendment removed the earlier 5-year lock-in for the All Citizen Model, so there is no minimum period for a premature exit.

• Corpus up to ₹5 lakh: withdraw all of it, or take up to 20% and annuitise the rest.
• Corpus above ₹5 lakh: at least 80% must buy an annuity; up to 20% comes as cash.

You cannot defer benefits on a premature exit. The annuity can start straight away, subject to the minimum age set by the annuity provider you choose.

Continuing or deferring after you become eligible

Exit is optional. If you do nothing, your account continues automatically, and you can keep contributing, up to age 85. You can also defer either the lump sum or the annuity purchase, but not both, up to 85. At 85 you must exit.

Death of the subscriber

Nominees or legal heirs can take the entire corpus as a lump sum, buy an annuity, or use SLW or SUR. If a subscriber is reported missing, 20% is released as interim relief. The remaining 80% is paid once a court declares the subscriber presumed dead.

Partial withdrawal from Tier-I

You can make a partial withdrawal once you complete 3 years in the scheme. The limits are:

Allowed purposes are children’s higher education or marriage, and medical treatment or hospitalisation of yourself, your spouse, children or parents. Disability expenses count too, as does repaying a loan taken against a lien on your NPS account. You can also withdraw once to buy or build a house, provided you do not already own one other than ancestral property. Skill development and start-up funding were removed as purposes in December 2025.

How to file the withdrawal request

For a Protean (NSDL) CRA account, the online route is:

1. Log in to the CRA site with your PRAN and password.
2. Go to Manage My Withdrawal > Exit from NPS > Initiate request.
3. Enter the lump sum and annuity percentages, marital status, spouse details, and your annuity provider and scheme.
4. Upload scanned identity and address proof. The upload is mandatory.
5. Sign the request with OTPs sent to your registered mobile and email, or with Aadhaar eSign.
6. Wait for your Point of Presence (POP) or nodal office to verify your KYC and authorise the request.

If you cannot apply online, submit the physical withdrawal form, KYC documents and bank proof to your POP or nodal office. Subscribers with KFintech or CAMS as their CRA use that agency’s site.

Tax on the lump sum and annuity

Check the tax on your withdrawal with the income tax calculator, and project your corpus with the NPS calculator. If your case involves a large corpus or several accounts, a chartered accountant can work out the tax. For how NPS works before exit, see our NPS guide, and our page on annuity and pension plans explains the payout types.

Frequently asked questions

How much NPS money can I withdraw at 60?

Non-government subscribers can take up to 80% as a lump sum, and government subscribers up to 60%. The balance must buy an annuity. With a corpus of ₹8 lakh or less, you can withdraw all of it.

Can I exit NPS after 15 years?

Yes, if you are in the All Citizen Model. Completing 15 years in the scheme counts as normal exit even before 60.

Can I close my NPS account before 15 years?

Yes, as a premature exit. You get up to 20% as cash and at least 80% goes into an annuity, unless the corpus is ₹5 lakh or less.

How many times can I make a partial withdrawal from NPS?

Up to 4 times before 60, with at least 4 years between withdrawals. After 60 there is no count limit, but withdrawals must be 3 years apart.

Is the 80% NPS lump sum fully tax-free?

No. The Income-tax Act exempts up to 60% of the corpus, so the extra 20% is taxed at your slab rate unless the law is amended.

Is it compulsory to buy an annuity from NPS?

Yes, except where the corpus is small enough for full withdrawal, or when nominees claim after the subscriber’s death.

What happens to Tier-II when I exit Tier-I?

Your Tier-II account is closed automatically at the same time and the balance is paid out.

Sources

• Key amendments in PFRDA (Exits and Withdrawals under the NPS) Regulations, 2015 — Press Information Bureau (checked 16 Sep 2026)
• FAQs: Exits and Withdrawals from NPS for All Citizen Model (updated March 2026) — PFRDA (checked 16 Sep 2026)
• FAQs: Exits and Withdrawals from NPS for Government Sector (CG and CAB) — PFRDA (checked 16 Sep 2026)
• Premature exit — National Pension System Trust (checked 16 Sep 2026)
• NPS exit option — Protean eGov Technologies (CRA) (checked 16 Sep 2026)
• New NPS withdrawal rules: only 60% tax-free — 1 Finance (checked 16 Sep 2026)
• New Income Tax Bill 2025: NPS and UPS withdrawals — Business Today (checked 16 Sep 2026)
• Section 10(12B) and NPS partial withdrawal — Upstox (checked 16 Sep 2026)