Introduction

The National Pension System (NPS) is a long‑term retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Traditionally, NPS was designed to ensure a steady pension after retirement by requiring most of the accumulated corpus to be used for purchasing an annuity. However, recent rule changes have made withdrawal rules more flexible, including clear situations where subscribers can withdraw 100% of their corpus.

What Is the NPS Corpus?

The corpus refers to the total accumulated amount in an NPS subscriber’s account, including contributions by the subscriber (and employer where applicable) and the investment growth over time. This fund is meant to support the subscriber in retirement.

Under older rules, a large portion of this corpus had to be used to buy an annuity, which provides a monthly pension, leaving only a limited amount for lump‑sum withdrawal. But the new rules have changed this framework.

When Is 100% Full Withdrawal Allowed?

1. If the Total Corpus Is ₹8 Lakh or Less

Under the revised NPS rules, subscribers can withdraw 100% of their accumulated corpus at the time of exit if:

• They are exiting NPS upon retirement (generally at age 60 or later), and
• Their total NPS corpus is ₹8 lakh or less.
  In such cases, the subscriber does not have to buy any annuity — they can take the entire amount as a lump sum or through structured withdrawals.

This is one of the biggest relaxations introduced in the latest NPS exit rules.

2. Death of an NPS Subscriber

If an NPS subscriber passes away at any age, the entire accumulated corpus — irrespective of its data-size — is payable to the nominee or legal heir. No annuity purchase is required in this case.

3. Early Exit with Small Corpus (Earlier Rules)

Under earlier norms (before the 2025‑26 overhaul), subscribers could withdraw 100% only if their corpus was below ₹5 lakh and they had completed a minimum time (like 5 years) in NPS. However, this provision has been effectively revised with the newer ₹8 lakh threshold for full withdrawal at exit.

New Flexible Exit Options

Even if the corpus is higher than ₹8 lakh, subscribers now have more options:

• Corpus Between ₹8 Lakh and ₹12 Lakh

Subscribers can:

• Withdraw up to ₹6 lakh as a lump sum, and
• Take the remaining amount either through periodic payouts (such as Systematic Unit Redemption (SUR) or Systematic Lump Sum Withdrawal (SLW)),
• Buy an annuity if they prefer.

• Corpus Above ₹12 Lakh

Subscribers can now withdraw up to 80% of their corpus as a lump sum, and must use at least 20% to purchase an annuity to generate pension income.

Extended Age Limit and Flexibility

The new rules also allow subscribers to:

• Continue investing in NPS until age 85, instead of the earlier cap around age 75.
• Make more frequent partial withdrawals based on needs like education, medical treatment, or marriage.

This flexibility helps retirees and long‑term investors better plan their retirement income and liquidity needs.

Why These Changes Matter

✔ More Liquidity at Retirement

The higher lump‑sum withdrawal option (up to 80–100% in specific cases) gives retired subscribers greater control over their money, especially if they prefer to invest elsewhere or manage health and family expenses.

✔ Reduced Mandatory Annuity Burden

Earlier, up to 40% of the corpus had to be used to buy an annuity. Now, for most non‑government subscribers, that requirement has dropped to 20%, significantly increasing take‑home funds.

✔ Beneficiary Protection on Death

Nominees now receive the entire corpus without annuity purchase obligations — an important safeguard for families.

Key Takeaways

Situation

100% Withdrawal Allowed?

Corpus ≤ ₹8 lakh at retirement

Yes (no annuity required)

Death of subscriber

Yes (entire corpus to nominee)

Corpus between ₹8 lakh – ₹12 lakh

Partial options, full 100% not direct

Corpus > ₹12 lakh

Up to 80% lump sum, with annuity on rest

Conclusion

The new NPS rules mark a major shift toward flexibility and subscriber‑friendly features, especially by allowing 100% corpus withdrawal for smaller retirement funds (up to ₹8 lakh) and extended exit options. They also reduce compulsory annuity requirements and offer more structured withdrawal methods for larger corpus data-sizes. These changes help subscribers tailor their retirement income to personal financial goals and family needs.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.