Practical Guide to PFRDA (Exits and Withdrawals under NPS) Regulations, 2015

The Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) Regulations, 2015 lay down the complete legal and procedural framework for how an assessee can exit from the National Pension System (NPS), withdraw pension wealth, and purchase annuity. These regulations, issued under the Pension Fund Regulatory and Development Authority Act, 2013, govern Government and non-Government NPS subscribers, including NPS-Lite and Swavalamban, and are periodically amended (last major amendments being up to 16 December 2025).

This article explains the regulatory scheme in simple, structured manner, while preserving all statutory references and terminology used in the Regulations.

1. Scope and Objective of the Regulations

1.1 Purpose of the 2015 Regulations

The regulations titled Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) Regulations, 2015 are intended to:

  • Provide a clear mechanism for exit and withdrawal from NPS;
  • Prescribe conditions, purposes, frequency and limits for withdrawals from an individual pension account;
  • Prescribe when and to what extent the assessee (or nominee/family/legal heir) must use the corpus to purchase an annuity;
  • Specify the process and conditions for:
    • exit on superannuation, retirement or attaining 60 years of age;
    • premature exit or resignation/dismissal;
    • death, disability/invalidity, renunciation of citizenship, and cases where subscriber is missing and presumed dead;
  • Lay down rules for partial withdrawals and operation of Tier-I and Tier-II accounts;
  • Provide the framework for annuity purchase and empanelment of annuity service providers.

The regulations came into force from the date of publication in the Official Gazette and currently apply to all exits and withdrawals from pension schemes under the National Pension System, as clarified in sub-regulation (1A) of Regulation 1.

1.2 Key Definitions Relevant to Exits and Withdrawals

Some important terms defined in Regulation 2 include:

  • “Act”: Pension Fund Regulatory and Development Authority Act, 2013 (23 of 2013).
  • “Accumulated pension wealth”: the monetary value of the investments that have accumulated in each individual pension account of the subscriber under NPS.
  • “Annuity service provider”: a life insurance company registered with and regulated by IRDAI and empanelled by PFRDA for providing annuities to NPS subscribers.
  • “Government sector subscriber”: a subscriber enrolled in NPS through Central/State Government nodal offices (including autonomous bodies) and registered as such with the Central Recordkeeping Agency.
  • “Swavalamban subscriber” and “National Pension System-Lite”: specific categories under the earlier NPS-Lite/Swavalamban framework where Government co-contribution was admissible.
  • “Non-Government Sector Subscriber”: any subscriber under NPS other than Government sector subscriber.
  • “All Citizen Model Subscriber”: a voluntary NPS subscriber registered as such.
  • “Corporate Sector Subscriber”: a non-Government sector subscriber who joins NPS through his employer and is registered as such.
  • “Pension scheme”: any pension scheme of a Pension Fund under Section 20 of the Act, including common schemes, multiple scheme framework and other schemes approved by PFRDA.
  • “Exit”: a defined term under Regulation 2(k) which covers:
    • closure of an individual pension account or opting out of a pension scheme in defined situations (superannuation/retirement/60 years; specified period of contribution; premature closure);
    • closure upon death or when subscriber is missing and presumed dead under the Bharatiya Sakshya Adhiniyam, 2023.

Note: Where an assessee holds more than one individual pension account, the exit decision has to be taken separately for each account as per these regulations.

The regulations also recognize the “CCS NPS Rules 2021” for Central Government employees and link certain exit conditions to those Rules.

2. Categories of Subscribers for Exit Purposes

For implementing exit and withdrawal rules, the regulations classify subscribers into three broad groups:

  1. Government sector subscribers;
  2. Non-Government sector subscribers;
  3. NPS-Lite and Swavalamban subscribers.

Each category has a distinct exit regime, including varying annuitisation thresholds and withdrawal options.

3. Exit Rules for Government Sector Subscribers (Regulation 3)

Government sector subscribers have a detailed exit framework, particularly where the Government (or autonomous bodies) has contributed to Tier-I.

3.1 Exit on Superannuation/Retirement or on Attaining 60 Years

When a Government sector subscriber:

  • retires or superannuates in terms of service conditions; or
  • attains 60 years of age (or later, if continuing in NPS);

then, broadly:

  • At least 40% of the accumulated pension wealth must be used to purchase a default annuity (unless the corpus is small, as discussed below);
  • The balance corpus can be taken as:
    • lump sum, or
    • systematic lump sum withdrawal, or
    • systematic unit redemption, or
    • any other withdrawal mode as may be approved by PFRDA.

Relaxation for smaller corpus:

  • If accumulated pension wealth does not exceed Rs. 8 lakh:

    • The assessee may withdraw the entire amount as lump sum or via systematic withdrawal options, without mandatory annuity purchase.

  • If accumulated pension wealth is more than Rs. 8 lakh but not more than Rs. 12 lakh:

    • Up to Rs. 6 lakh may be withdrawn as lump sum or systematic withdrawals; and
    • The balance must be used for:
      • systematic unit redemption for at least six years, or
      • annuity, or
      • other options as PFRDA may approve.

Deferment:

  • The subscriber may defer annuity purchase and/or lump sum withdrawal up to age 85, by submitting a request to NPS Trust or an authorised intermediary.
  • During the deferment period, the subscriber can choose to exit at any time.

On death during deferment:

  • If annuity purchase was deferred:
    • Default annuity must be purchased by the family members in the specified order.
  • If lump sum withdrawal was deferred:
    • The deferred lump sum is paid directly to nominee(s)/legal heir(s).

3.2 Exit on Resignation, Dismissal or Removal

Where the Government sector subscriber is allowed to resign, or is dismissed/removed:

  • At least 80% of accumulated pension wealth must be compulsorily used to purchase default annuity (or any other annuity offered by empanelled annuity service providers);
  • Balance can be withdrawn as lump sum or systematic withdrawals.

If the accumulated pension wealth is Rs. 5 lakh or less (or such other limit specified by PFRDA):

  • The assessee may opt to withdraw the entire amount as lump sum or systematic withdrawals, without any annuity purchase.

3.3 Exit in Case of Death Before Superannuation

If the Government sector subscriber dies before superannuation:

  • At least 80% of the accumulated pension wealth must be used to purchase the default annuity;
  • Remaining amount is to be paid to the nominee(s) or legal heir(s) as lump sum or systematic withdrawals.

For small corpus in such cases:

  • If accumulated pension wealth does not exceed Rs. 8 lakh:

    • Nominee(s)/legal heir(s) may withdraw 100% in lump sum or use systematic withdrawal options (no compulsory annuity).

  • If accumulated pension wealth is more than Rs. 8 lakh but not more than Rs. 12 lakh:

    • Up to Rs. 6 lakh can be withdrawn as lump sum or systematic withdrawals; and
    • Balance must be used as systematic unit redemption for at least six years or annuity or other options approved by PFRDA.

3.4 Exit on Invalidation/Disability or Premature Retirement

Where the employer certifies that the subscriber has been discharged on account of:

  • invalidation or disability, or
  • premature retirement as per applicable service rules,

the exit pattern mirrors Regulation 3(1)(a) (i.e., superannuation route).

For Central Government employees, exit will follow CCS NPS Rules 2021 when exit is due to:

  1. Completion of 20 years’ regular service;
  2. Retirement under Rule 56 of the Fundamental Rules or a special voluntary retirement scheme;
  3. Retirement on invalidation;