What new NPS withdrawal rules mean for retirement

The article explains recent reforms to the National Pension System (NPS) withdrawal rules and how they change retirement planning, particularly addressing the earlier criticism that NPS exits were too rigid due to a mandatory annuity purchase.

In December 2025, the Pension Fund Regulatory and Development Authority (PFRDA) amended NPS exit norms, reducing the mandatory annuity share from 40% to 20% of the accumulated corpus. Subscribers can withdraw up to 80% as a lump sum instead of the earlier 60% cap.

A more favorable structure applies to smaller corpuses: subscribers with up to ₹8 lakh can withdraw the entire amount; those with corpses between ₹8 lakh and ₹12 lakh can withdraw up to ₹6 lakh. For amounts above ₹12 lakh, the general 80:20 split remains.