For non-government NPS subscribers, exit rules depend on the accumulated pension wealth (APW) and the type of exit. On normal exit after 15 years, at age 60, or on superannuation, subscribers with APW up to Rs 8 lakh can withdraw the entire amount as a lump sum without buying an annuity. 

Non-government employees who have opted for the National Pension System (NPS) can withdraw up to 80% of their retirement corpus as a lump sum at the time of exit. Under a new set of rules issued by the Pension Fund Regulatory and Development Authority (PFRDA), effective December 2025, non-government subscribers whose accumulated pension wealth exceeds the specified monetary thresholds are allowed to withdraw up to 80% either as a lump sum or through a structured withdrawal system. The remaining 20% must be retained in the account and used to purchase an annuity, which provides periodic pension income.

Withdrawal clauses

For non-government NPS subscribers, exit rules depend on the accumulated pension wealth (APW) and the type of exit. On normal exit after 15 years, at age 60, or on superannuation, subscribers with APW up to Rs 8 lakh can withdraw the entire amount as a lump sum without buying an annuity. 

If APW exceeds this limit, a portion must be used to purchase an annuity. In case of voluntary exit before 60, annuity requirements are stricter unless the corpus is small. Upon the subscriber’s death, the nominee can receive up to 100% of the corpus, with annuity remaining optional.

1. Normal exit (after 15 years / age 60 / superannuation / physical incapacity)

If APW ≤ ₹8 lakh

100% lump sum allowed

No annuity required

If APW > ₹8 lakh and ≤ ₹12 lakh

You have three choices:

Withdraw up to ₹6 lakh lump sum, balance via systematic withdrawal

Withdraw up to ₹6 lakh lump sum, balance used for annuity

Withdraw up to 80% lump sum, minimum 20% annuity

If APW > ₹12 lakh

Withdraw up to 80% lump sum

At least 20% must go into annuity
 

2. Voluntary exit (before age 60)

If APW ≤ ₹5 lakh

100% lump sum allowed

No annuity required

If APW > ₹5 lakh

Withdraw up to 20% lump sum

At least 80% must go into annuity
 

3. Exit for those who joined NPS at or after age 60

If APW ≤ ₹12 lakh

100% lump sum allowed

No annuity required

If APW > ₹12 lakh

Withdraw up to 80% lump sum

At least 20% annuity compulsory

4. Death of subscriber (any scenario)

Up to 100% of APW can be paid to nominee

Annuity is optional, not mandatory

https://www.businesstoday.in/personal-finance/retirement-planning/story/pfrda-eases-nps-exit-rules-for-non-government-subscribers-lowers-mandatory-annuity-to-20-507010-2025-12-17