New Delhi: The National Pension System (NPS) is no longer just a tax-saving instrument. Recent regulatory changes have reshaped it into a more flexible and retirement-focused investment option. The reforms aim to provide subscribers with greater withdrawal flexibility, extended investment tenure, and improved exit provisions.
Here are the 10 major changes explained simply:
1. Higher Lump-Sum Withdrawal at Retirement
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Non-government subscribers can now withdraw up to 80 percent of their corpus as a lump sum, compared to the earlier 60 percent.
2. Lower Mandatory Annuity Requirement
The compulsory annuity purchase has been reduced from 40 percent to 20 percent, allowing investors more control over their retirement funds.
3. Full Withdrawal for Smaller Corpus
If the total accumulated pension wealth is Rs 8 lakh or less, subscribers can withdraw the entire amount without buying an annuity.
4. Flexible Option for Rs 8–12 Lakh Corpus
For savings between Rs 8 lakh and Rs 12 lakh, investors can withdraw up to Rs 6 lakh upfront and manage the remaining amount through annuity or systematic withdrawals.
5. Investment Till Age 85
Subscribers can now stay invested in NPS until 85 years of age, enabling longer compounding.
6. More Partial Withdrawals Before Retirement
The number of allowed pre-retirement withdrawals has increased from three to four, offering more flexibility during emergencies.
7. Post-60 Withdrawals Allowed
Partial withdrawals after turning 60 are permitted, provided there is a three-year gap between withdrawals.
8. Improved Exit Provisions
Clearer rules have been introduced for exit cases such as renunciation of Indian citizenship or death declarations.
9. Relief for Missing Subscribers
If a subscriber goes missing, nominees can claim 20 percent of the corpus immediately, with the remaining amount handled as per legal procedures.
10. Account-Centric Structure
The new framework shifts focus to individual pension accounts, making management and tracking more streamlined.
