The Pension Fund Regulatory and Development Authority (PFRDA) has made important changes in the rules related to the National Pension System (NPS). These amendments have been implemented under the PFRDA (Relating to Withdrawals and Exit under the National Pension System) (Amendment) Regulations, 2025. These are aimed at giving government and non-government NPS subscribers more choice and flexibility in fund withdrawal and investment after retirement. The key changes made for government employees include increasing the maximum exit age from NPS, introduction of Systematic Unit Redemption (SUR) and increasing the 100% withdrawal limit from ₹5 lakh to ₹8 lakh.
Now government employees will be able to remain in NPS till 85 years
Under the new rules, government employees can now continue investing in NPS till the age of 85 years after retirement or superannuation, whereas earlier this limit was 75 years. At the age of 85 years, it will be mandatory to invest at least 40% of the total deposited amount in annuity. The remaining amount can be withdrawn in lump sum or through SUR. Anita Basrur, Partner, Sudit K. According to Parekh & Company LLP, continuing to invest till the age of 85 can further strengthen the retirement corpus in the long term.
Facility to withdraw full amount on corpus up to ₹8 lakh
On retirement or discharge from service, if the total NPS corpus of a government employee is up to ₹8 lakh, he can now withdraw 100% of the amount in lump sum. Earlier this facility was available only on corpus up to ₹5 lakh. According to Vaibhav Bhardwaj, Partner, Khaitan & Co, this change significantly simplifies the withdrawal process at the time of retirement for government employees with small corpus.
New options on corpus ranging from ₹8 lakh to ₹12 lakh
If the NPS corpus at the time of retirement is more than ₹8 lakh and up to ₹12 lakh, a maximum lump sum of ₹6 lakh can be withdrawn. The remaining amount can be withdrawn through annuity or Systematic Unit Redemption (SUR) for a minimum period of 6 years.
Systematic Unit Redemption – A New Facility
Systematic Unit Redemption (SUR) has been introduced for the first time in NPS. Under this, the subscriber can redeem his investment units in a phased manner at fixed intervals, so that he can continue to get regular income. SUR can be availed under the following circumstances:
- On retirement or discharge from service
- If the corpus is more than ₹8 lakh and up to ₹12 lakh.
- Maximum ₹6 Lakh Lumpsum
- Balance through SUR
- It is not mandatory to buy annuity in this option
In case of death of the subscriber
If corpus is more than ₹8 lakh and up to ₹12 lakh:
- Maximum ₹6 Lakh Lumpsum
- Balance through SUR
According to Anita Basrur, “SUR provides regular income to government NPS subscribers and helps reduce the financial risk associated with longevity.
New corpus slab fixed for withdrawal
The government has introduced two new corpus slabs to simplify the withdrawal process:
- Corpus up to ₹8 lakh
- 100% lump sum withdrawal
- Or 60% lumpsum and balance through SUR
Corpus ₹8 lakh to ₹12 lakh
- ₹6 Lakh Lumpsum + Balance SUR
- ₹6 lakh lumpsum + annuity from the balance
- Annuity from 60% lump sum + minimum 40% amount
New arrangement for NPS subscribers considered missing or dead
If an NPS subscriber goes missing or is presumed dead, as per the new rules:
- 20% amount will be given in lump sum as interim relief to the nominee or legal heir.
- The remaining 80% amount will remain invested.
- This amount will be released after the subscriber is declared dead under the Indian Evidence Act, 2023.
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