What are the NPS withdrawal rules?

Key Takeaways

1. NPS partial withdrawal is allowed only after completing three years from the date of joining NPS.
2. A subscriber can withdraw up to 25 percent of their own contributions for approved reasons.
3. Partial withdrawal before 60 or superannuation is allowed up to four times from each individual pension account.
4. Normal exit rules depend on the subscriber category and total accumulated pension wealth.
5. Premature exit has stricter rules. If the corpus is above ₹5 lakh, at least 80 percent must be used to purchase an annuity.
6. Subscribers can continue or defer NPS beyond 60, subject to applicable rules.
7. In case of death, the withdrawal treatment differs for government and non-government sector subscribers.

Overview

The National Pension System, widely known as NPS, is one of India’s most structured retirement savings options. It is designed to help individuals build a retirement corpus through regular contributions during their working years. But while starting an NPS account is fairly simple, many subscribers become unsure when it comes to withdrawals.

Can you withdraw before retirement? How much can you take out at 60? Is an annuity compulsory? What happens if you exit early?

These are important questions because NPS is not meant to work like a regular savings account. It is built mainly for retirement planning. That is why the withdrawal rules are carefully defined. They allow subscribers to access money in certain situations, while also ensuring that a part of the corpus continues to support them through pension income.

Understanding NPS withdrawal rules

NPS withdrawal rules are mainly divided into four parts. These include partial withdrawal, normal exit, premature exit, and withdrawal after the death of the subscriber.

Partial withdrawal means taking out a portion of your money while keeping the NPS account active. Normal exit usually happens at 60, superannuation, or after the required subscription period. Premature exit means closing the account before the normal exit stage. Death-related withdrawal applies when the subscriber passes away and the nominee or legal heir claims the amount.

The NPS Trust states that partial withdrawal allows a subscriber to withdraw part of the accumulated pension wealth without closing the individual pension account, subject to eligibility and limits.

Partial withdrawal from NPS

A subscriber can apply for a partial withdrawal only after being part of NPS for at least three years from the date of joining. Before attaining 60 years of age or superannuation, partial withdrawal can be made up to four times from each individual pension account. Each time, the withdrawal amount can be up to 25 percent of the subscriber’s own contributions in that account. A minimum gap of four years is required between two successive partial withdrawals.

This means the full NPS balance cannot be withdrawn for short-term needs. Also, the 25 percent limit applies only to the subscriber’s own contribution and not to the total corpus, which may include returns and other contributions.

Reasons allowed for partial withdrawal

NPS partial withdrawal is permitted only for specific needs. These include higher education of children, marriage of children, one-time purchase or construction of a residential house or flat, medical treatment or hospitalisation of the subscriber or family members, medical or incidental expenses arising from disability or incapacitation, and settlement of a financial obligation against a lien or charge marked on the individual pension account.

This makes NPS useful during major life events, but it also prevents unnecessary withdrawals. For example, a subscriber may be able to use partial withdrawal for a child’s higher education, but not for routine lifestyle expenses.

Normal exit from NPS

Normal exit applies when the subscriber reaches the applicable retirement stage. For subscribers who joined NPS between the ages of 18 and 60, normal exit may apply on attaining 60 years, completing 15 years of subscription, or reaching superannuation, depending on the subscriber category and scheme rules.

At normal exit, the rules depend on accumulated pension wealth, also known as APW. APW simply means the total value available in the NPS account at the time of exit.

For government sector subscribers, if APW is up to ₹8 lakh, the entire amount can be withdrawn as a lump sum or through periodic payout options. If APW is above ₹8 lakh and up to ₹12 lakh, the subscriber can withdraw up to ₹6 lakh, while the balance must be used for an annuity or periodic payout in the form of systematic unit redemption for at least six years. If APW is above ₹12 lakh, at least 40 percent must be used to purchase an annuity, and the balance can be withdrawn as a lump sum or through periodic payout options.

For non-government sector subscribers, including All Citizen, unorganised sector, and corporate sector subscribers, if APW is up to ₹8 lakh, full withdrawal is allowed. If APW is above ₹8 lakh and up to ₹12 lakh, up to ₹6 lakh can be withdrawn, while the balance must be used for an annuity or systematic unit redemption for at least six years. If APW is above ₹12 lakh, at least 20 percent must be used to purchase an annuity, and the balance can be withdrawn as a lump sum or through periodic payout options.

Rules for those who join NPS after 60

NPS is also available for individuals who join at or after the age of 60. Such subscribers can exercise normal exit anytime. If APW is up to ₹12 lakh, the full amount can be withdrawn as a lump sum or through periodic payouts. If APW is above ₹12 lakh, at least 20 percent must be used for an annuity, and the balance can be withdrawn as a lump sum or through periodic payout options.

This rule is useful for senior citizens who want to participate in NPS but may not want a very long lock-in period.

Premature exit from NPS

Premature exit means closing the NPS account before the normal exit stage. For subscribers who joined between 18 and 60 years, premature exit may apply before 60, before completing 15 years of subscription, before the required scheme period, or before superannuation, whichever is applicable.

If APW is up to ₹5 lakh, the entire amount can be withdrawn as a lump sum or through periodic payouts. If APW is above ₹5 lakh, at least 80 percent must be used to purchase an annuity that provides a periodic pension, while the remaining amount can be withdrawn as a lump sum or through periodic payout options. These rules apply to both government and non-government sector subscribers.

This is why premature exit should be planned carefully. It may provide access to some funds, but it may not give full liquidity if the corpus is above the specified limit.

Withdrawal from Tier II account

NPS Tier II withdrawal rules are different from Tier I. A subscriber with a valid and active Tier II account can withdraw accumulated wealth either fully or partially at any time. There is no limit on such withdrawals, provided the account has enough balance to cover applicable charges and the withdrawal amount. However, the Tier II account closes automatically when the Tier I account is closed.

Withdrawal after death of subscriber

In the unfortunate event of the subscriber’s death, the rules depend on the subscriber category.

For government sector subscribers, if APW is up to ₹8 lakh, the entire amount is payable to the nominee or legal heir. If APW is above ₹8 lakh and up to ₹12 lakh, the nominee or legal heir can withdraw up to ₹6 lakh, while the balance is used for annuity or periodic payout. If APW is above ₹12 lakh, at least 80 percent must be used for a default annuity by eligible family members, and the balance can be paid as a lump sum or through periodic payouts.

For non-government sector subscribers, the entire APW is payable to the nominee or legal heir, irrespective of the ₹8 lakh limit. The nominee or legal heir may also choose periodic payouts or annuity.

Things to remember before withdrawing from NPS

NPS withdrawal should not be treated as a casual decision. Since the scheme is linked to retirement planning, every withdrawal affects the final corpus. Before making a decision, subscribers should check their age, subscriber category, accumulated pension wealth, annuity requirement, and long-term income needs.

It is also important to keep nominee details updated. This simple step can help family members avoid unnecessary delays during claim settlement.

Frequently Asked Questions

1.What is the minimum period for an NPS partial withdrawal

A subscriber must complete at least three years from the date of joining NPS before applying for a partial withdrawal.

2.How much can I withdraw partially from NPS?

Before 60 or superannuation, a subscriber can withdraw up to 25 percent of their own contribution in that individual pension account, subject to approved reasons and frequency limits.

3.Can I withdraw the full NPS amount at retirement

Full withdrawal is possible only when the accumulated pension wealth falls within the specified limit. For subscribers who joined between 18 and 60, full withdrawal is allowed when APW is up to ₹8 lakh at normal exit.

4.Is an annuity compulsory in NPS

An annuity is compulsory in certain cases. For example, at normal exit, if APW is above ₹12 lakh, government sector subscribers must use at least 40 percent for annuity, and non-government sector subscribers must use at least 20 percent for annuity.

5.What happens if I exit NPS before retirement

If APW is up to ₹5 lakh, full withdrawal is allowed. If APW is above ₹5 lakh, at least 80 percent must be used to purchase an annuity, and the remaining amount can be withdrawn.

6.Can I withdraw from NPS Tier II anytime?

Yes. A valid and active Tier II account allows full or partial withdrawal at any time, subject to sufficient balance and applicable charges.

Conclusion

NPS withdrawal rules are designed to balance flexibility with retirement security. Partial withdrawals help during important life events, normal exit rules support planned retirement, and annuity provisions help create a steady pension stream. Before withdrawing, subscribers should understand the applicable rule for their category and corpus size.

For customers looking to start or manage their retirement planning journey, Bank of Maharashtra provides access to National Pension System services such as eNPS new registration, online contribution, and NPS SIP registration. This makes it easier to plan long-term savings through a trusted banking channel while staying aligned with formal NPS processes.

Author: Bank of Maharashtra
Date of Publish: 25 Jun, 2026