New NPS Rules 2025: Exit Rules for Government vs Private Employees

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New NPS Rules 2025: Exit Rules for Government vs Private Employees 

The Pension Fund Regulatory and Development Authority (PFRDA) has updated the NPS exit and withdrawal rules in 2025. The new rules clearly differentiate between government and private (non-government) NPS subscribers, making the exit process more transparent.

Below is a simple, point-wise comparison of the new rules.

1️⃣ Exit Age & Deferment Option

  • Both government and private NPS subscribers can exit NPS at 60 years.

  • Both can delay withdrawal and annuity purchase up to 85 years.

  • This allows subscribers to stay invested longer if they wish.

2️⃣ 100% Withdrawal at Retirement (Small Corpus Benefit)

  • If the total NPS corpus is up to ₹8 lakh:

    • 100% withdrawal is allowed for both government and private subscribers.

  • This helps retirees with smaller savings avoid compulsory annuity purchase.

3️⃣ Annuity Requirement – Key Difference

This is where the major difference lies:

  • Government employees

    • Must use 40% of corpus to buy annuity

    • Applies when corpus exceeds ₹12 lakh

  • Private sector employees

    • Need to annuitise only 20% of corpus

    • Allows much higher lump-sum withdrawal

4️⃣ Lump-Sum Withdrawal at Retirement

Because of lower annuity requirement:

  • Government NPS subscribers

    • Can withdraw up to 60% of the corpus

  • Private NPS subscribers

    • Can withdraw up to 80% of the corpus

➡️ Private NPS offers more flexibility and liquidity at retirement.

5️⃣ New ₹8–12 Lakh Slab (Applies to Both)

  • For corpus between ₹8 lakh and ₹12 lakh:

    • Up to ₹6 lakh can be withdrawn upfront

    • Remaining amount must be taken via annuity or systematic withdrawal

  • This slab system removes confusion and brings uniform rules.

6️⃣ Death & Family Protection Rules

If the subscriber dies before exit:

  • Private NPS

    • 100% corpus paid to nominee or legal heirs

  • Government NPS

    • Annuity rules apply based on corpus size

  • For missing subscribers:

    • 20% interim relief allowed to families in both cases

7️⃣ Partial Withdrawals & Loans

Both government and private subscribers are treated equally:

  • Partial withdrawal up to 25% of self-contribution

  • Loans allowed against NPS with lien marking

This improves liquidity during working years.

🔍 Summary

  • Private sector subscribers gain more benefits:

    • Higher lump-sum withdrawal

    • Lower annuity compulsion

  • Government employees benefit from:

    • Higher full-withdrawal limit

    • Clear exit slabs

Overall, the 2025 NPS rules make exits simpler, clearer, and more flexible, especially for private sector employees.



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