PFRDA proposes NPS exit, withdrawal rule changes; seeks feedback by Oct 17
New Delhi, Sep 17, 2025
PFRDA has proposed amendments to NPS exit and withdrawal rules, including redefining exit, higher lump sum limits, revised partial withdrawals and financial assistance options
The Pension Fund Regulatory and Development Authority (PFRDA) has proposed amendments on exits and withdrawals under the National Pension System (NPS), including extending the timeframe for the one-time, one-way switch from Unified Pension Scheme (UPS) to NPS.
The PFRDA issued the exposure draft on Tuesday with key proposals being redefining the term “exit” to cover multiple scenarios, including under NPS Vatsalya and new non-government sector pension fund schemes; stipulating exit provisions for non-government sector schemes; increasing the age limit for entry and exit with automatic continuation; and removing the requirement for prior intimation in case of deferment of lump sum or annuity.
The draft also proposes enhancing the permissible limit for lumpsum withdrawals, introducing systematic unit redemption, where pension wealth is below the specified threshold, and allowing higher lumpsum withdrawals for non-government sector subscribers upon retirement.
“It has been decided that a one-time, one-way switch facility from UPS to NPS shall be made available to all central government employees who have opted for UPS. This switch facility may be exercised by UPS optees any time not later than one year prior to the date of superannuation or three months prior to the deemed date of retirement in case of voluntary retirement, as applicable,” the notification stated.
Moreover, other changes include removal of vesting requirements for normal exit if an individual joins after the age of 60; enabling subscribers to seek financial assistance from regulated institutions against their pension account; revising norms for partial withdrawals, including limits; frequency and purposes; and introducing the option of partial withdrawal even after retirement.
Exit provisions have also been stipulated in cases of renunciation of citizenship and under the NPS Vatsalya scheme.
[The Business Standard]
