Summary: The National Pension System (NPS) has seen several changes covering exit and withdrawal rules, investment choices, account servicing and subscriber facilities. Recent updates have raised the entry and exit age to 85 years, introduced greater flexibility at exit and expanded investment choices for non-government subscribers. This guide covers the key finalised changes and clearly separates them from proposals that are still under consultation.
The National Pension System (NPS) has undergone several regulatory changes across withdrawals, exit options, investment choices, account servicing and subscriber facilities. The changes have been introduced through separate regulations and circulars rather than through one single amendment, thereby making it important to distinguish between rules that are already applicable and proposals that are still under consultation.
The latest new NPS rules include a higher age limit, revised withdrawal thresholds, the Multiple Scheme Framework (MSF), changes to Point of Presence (PoP) charges and new facilities such as financial assistance against the pension corpus. Some of these changes have already taken effect, while others have specified future effective dates.
1. Higher Withdrawal Limits and Relaxed Exit Norms
The revised NPS exit framework has increased the entry and exit age to 85 years and has eliminated the earlier five-year minimum subscription requirement for the All Citizen Model under the Common Scheme and MSF. In addition, the framework offers more flexibility in the way that accumulated pension wealth can be accessed at normal exit.
At normal exit after 60 years of age or the applicable vesting period, the general framework allows up to 80% of the accumulated pension wealth as lump sum and at least 20% through annuity. However, a separate threshold applies to smaller corpora. If the accumulated pension wealth is up to ₹8 lakh, the entire amount can be taken as lump sum, Systematic Lump Sum Withdrawal (SLW), Systematic Unit Redemption (SUR) or another approved option. For a corpus above ₹8 lakh and up to ₹12 lakh, up to ₹6 lakh can be taken as lump sum, while the balance can be received through SUR for at least six years or through annuity.
The rules also provide greater flexibility for premature exits. The standard premature-exit structure remains up to 20% as lump sum and at least 80% through annuity. However, where the accumulated pension wealth is ₹5 lakh or less, the subscriber can withdraw the entire amount as lump sum, SLW, SUR or another approved payout option.
The revised framework has also removed the requirement for 15 days’ prior intimation for automatic continuation or deferment of NPS across sectors. In addition, the frequency of partial withdrawals has changed. Before age 60, a subscriber can make a partial withdrawal up to four times, with a four-year interval between withdrawals. After age 60, the frequency is unlimited, subject to a three-year interval, with the applicable limit of up to 25% of contributions.
These changes mean the new NPS rules do not simply increase one universal withdrawal limit. Instead, they create different thresholds and payout routes based on the subscriber’s age, exit circumstances and accumulated pension wealth.
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2. Annuity Surrender Flexibility
Annuity has traditionally formed an important part of NPS exit because the applicable rules require a portion of the accumulated pension wealth to be used to purchase an annuity in specified circumstances. PFRDA has now provided additional clarity on when an annuity policy purchased from NPS proceeds may be surrendered.
On 14 May 2026, PFRDA issued a clarification on the permissibility and procedure for surrender of annuity policies in certain cases. The clarification is relevant to eligible annuity policies and is subject to the conditions specified by PFRDA and the concerned Annuity Service Provider (ASP).
The change is important because an NPS annuity is purchased from an ASP and is governed by the terms of the annuity policy as well as the applicable regulatory framework. Therefore, surrender is not the same as making a normal NPS withdrawal. Subscribers need to check whether their policy falls within the permitted cases and follow the ASP’s prescribed procedure.
This is especially the case for older annuity policies and for the cases covered by the specific PFRDA clarification. The surrender value, amount payable and applicable deductions will depend on the particular annuity policy and terms set by the regulator.
3. Multiple Scheme Framework (MSF) and Higher Equity Allocation
The Multiple Scheme Framework (MSF) is one of the major new NPS scheme developments for non-government subscribers. Introduced by PFRDA in September 2025 and made effective from 1 October 2025, it allows eligible non-government subscribers to choose multiple investment schemes under NPS using the same or multiple PRANs linked to their PAN.
MSF pension funds are able to offer schemes with various investment strategies and risk profiles. This has increased the range of asset-allocation options available to non-government subscribers than was possible under the earlier common-scheme arrangement.
As per data shared by the NPS Trust, some of the MSF schemes currently allow up to 100% allocation in equity. For example, the published scheme list includes allocations such as 90% to 100% equity and 0% to 100% equity depending on the particular Pension Fund and scheme. That is not to say that every NPS subscriber has an automatic 100% allocation to equities. The amount you get depends on the scheme you choose and the stated investment limits.
PFRDA’s current All Citizen Model information also states that the MSF allows non-government subscribers to select schemes based on their risk profile, with some schemes allowing equity exposure of up to 100%.
The investment universe has also broadened. Pension funds may also invest in additional instruments including permitted gold and silver related exchange traded instruments in accordance with the applicable investment guidelines and limits of the PFRDA These investments are done by Pension Fund as per NPS investment framework. They do not mean that subscribers can directly purchase gold or silver ETFs in their individual NPS accounts.
The MSF therefore changes the structure of investment choice rather than creating a single new default allocation. Subscribers still need to consider the specific scheme’s asset allocation, risk classification and applicable restrictions before selecting an option.
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4. Revised Point of Presence (PoP) Charges
PFRDA has amended the PoP charge structure multiple times and the recent circular dated 28 August 2026 has introduced a new structure which will be applicable from 1 October 2026. The circular also eliminates the earlier classification between Common Schemes and schemes launched under the MSF for the purpose of the revised charge structure.
The one-time prescribed onboarding charge of ₹200 per PRAN will be effective from 1st October 2026. This is equal to ₹50 per quarter on cancellation of units by CRA. For subscribers who have subscribed through an end-to-end digital and non-face-to-face process, a lesser onboarding charge of ₹100 may be applicable depending on the amount as determined by the Authority for the concerned PoP.
The annual PoP charge will be 0.20% per annum of AUM, adjusted through the NAV and payable to the PoP on a quarterly basis. Dormant accounts will not attract this charge. PFRDA defines a dormant account as one where, after a contribution in a quarter, no contribution is made for four consecutive quarters, as identified across CRAs using the subscriber’s PAN.
The circular also mentions a minimum contribution of ₹250 at the time of onboarding and ₹10 for future contributions. PoP charges shall not be levied for subscribers onboarded through e-NPS and contributing through e-NPS or D-Remit. However, the subscribers who are onboarded through a PoP, are still liable to pay the prescribed PoP charges, even if they subsequently contribute through e-NPS or D-Remit.
PoPs should publish the updated charges on their websites and disclose the same during the digital onboarding process. Hence, the subscribers need to check the latest fee structure applicable to their PoP, instead of the stale NPS charge figures.
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5. Improved Tax Benefits
NPS tax benefits depend on the type of contribution, the applicable tax provision and the tax regime selected by the subscriber. The current framework should therefore be distinguished from older descriptions of NPS taxation that may no longer capture all applicable provisions.
The deduction under Section 80CCD(2) is subject to the prescribed percentage of salary on the employer contribution. The deduction can be claimed up to 14% of salary for all categories of employers under the new tax regime, the Income Tax Department said for AY 2026-27. The limit is 10% of salary for PSU and other employers and 14% for Central and State Government employers under the old tax regime.
In case of an individual’s own contribution to NPS, the contribution under Section 80CCD(1) is part of the overall limit of ₹ 1.5 lakh under Section 80CCE, subject to the applicable conditions. The eligible NPS contribution is deductible under Section 80CCD(1B) to the extent of ₹50,000 in addition to the limit under the applicable tax regime.
It should also be noted that the tax treatment of withdrawals must be distinguished from the withdrawal limits prescribed by PFRDA. As per the Income Tax framework, the eligible lump-sum amount received from NPS on final exit or closure is eligible for exemption subject to the applicable provisions while the pension received from an annuity is taxable as per the applicable tax treatment of the subscriber.
Therefore, an increase in the permissible lump-sum withdrawal under the new NPS rules does not automatically mean that the entire amount withdrawn is tax-free. Regulatory withdrawal limits and income-tax exemptions are separate concepts.
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6. Financial Assistance Against NPS Balance
The revised NPS framework has introduced a facility under which a subscriber can seek financial assistance from a regulated financial institution against the pension corpus without treating the transaction as a normal withdrawal.
Under the current framework, a lien or charge can be created against the NPS benefits, subject to the applicable conditions. PFRDA’s current All Citizen Model information specifies that financial assistance may be obtained against the pension corpus, with a lien of up to 25% of the subscriber’s own contribution. PFRDA also states that separate guidelines are to govern the facility.
This distinction matters because the facility is intended to provide access to financial assistance without requiring the subscriber to make a conventional withdrawal from the NPS account. The availability, documentation, lender requirements and operational process depend on the applicable PFRDA framework and the regulated financial institution.
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Proposals Still Under Consultation (Not Yet Final)
Not every development appearing in discussions about the new national pension scheme is an applicable rule. PFRDA continues to issue exposure drafts and invite stakeholder feedback before finalising certain regulatory changes.
As of 19 September 2026, PFRDA has an active Exposure Draft proposing amendments to the Point of Presence Regulations, 2018. The draft was issued on 2 September 2026 and remains open for stakeholder comments until 2 October 2026. It therefore should not be presented as a final NPS rule.
Among the proposed changes are provisions for separate physical and digital modes of PoP registration and servicing, broader eligibility for entities acting as PoPs and a framework for engaging NPS Mitras for specified distribution functions. The draft also proposes digital onboarding requirements and changes to the eligibility framework for PoPs.
The proposed framework is relevant to the future distribution and servicing of NPS, but its provisions may change following stakeholder feedback. Subscribers should therefore distinguish these proposals from regulations and circulars that are already in force.
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What These Changes Mean for Subscribers
The recent new NPS rules have broadly expanded flexibility in three areas: how subscribers can access their corpus, how non-government subscribers can structure their investments and how NPS accounts are serviced.
At exit, subscribers now have more payout options for smaller corpora, while the maximum age has increased to 85 years. Under MSF, non-government subscribers can choose from multiple schemes and, depending on the selected scheme, access equity allocations of up to 100%. PoP charges are also being standardised further from 1 October 2026.
At the same time, not every change applies to every NPS subscriber. The applicable rules can depend on the subscriber category, the type of NPS account or scheme, the date of onboarding, the accumulated pension wealth and the circumstances of exit.
This makes it important to distinguish between the regulatory framework applicable to a subscriber’s account and broader developments that may apply only to specific NPS models or take effect at a later date.
Conclusion
The new NPS rules have introduced significant changes across withdrawal and exit options, investment flexibility, account servicing and subscriber facilities. The entry and exit age has increased to 85 years, smaller-corpus exit options have been expanded, MSF has introduced multiple investment schemes for non-government subscribers and PoP charges are being revised again from 1 October 2026.
At the same time, proposed changes should not be confused with final regulations. As of 19 September 2026, PFRDA’s proposed amendments to the PoP Regulations remain open for consultation until 2 October 2026.
Since NPS regulations, tax provisions and operational guidelines can change independently, you should check the latest PFRDA circulars and applicable tax provisions before acting on a specific rule.
Additionally, if you are looking for information on retirement planning and NPS-related wealth services, Tata Capital Wealth also provides retirement-planning and Corporate NPS-related services.
FAQs
The revised NPS framework has increased the entry and exit age to 85 years. The rules also allow continuation or deferment of NPS beyond the normal retirement point, subject to the applicable conditions. The earlier 15-day prior-intimation requirement for automatic continuation has also been removed.
There is no single universal withdrawal limit. At normal exit, a corpus of up to ₹8 lakh can be received entirely through lump sum or approved payout options. For a corpus above ₹8 lakh and up to ₹12 lakh, up to ₹6 lakh can be taken as lump sum, with the balance subject to the prescribed payout options.
The Multiple Scheme Framework allows eligible non-government subscribers to hold multiple NPS schemes under the same or multiple PRANs linked to their PAN. It was introduced from 1 October 2025 and allows Pension Funds to offer schemes with different investment strategies, including some schemes permitting equity allocation of up to 100%.
Surrender may be permitted in certain cases covered by PFRDA's 14 May 2026 clarification. However, surrender depends on the applicable regulatory conditions, the annuity policy and the procedure of the Annuity Service Provider. It should not be treated as an ordinary NPS withdrawal.
From 1 October 2026, the prescribed PoP onboarding charge will be ₹200 per PRAN, with a reduced ₹100 charge potentially applicable to fully digital, non-face-to-face onboarding. The annual charge will be 0.20% of AUM, payable quarterly, while dormant accounts will not be charged.
Pension Funds can invest in permitted gold and silver-related exchange-traded instruments under the applicable NPS investment guidelines and limits. This does not mean that subscribers can directly purchase Gold or Silver ETFs through their individual NPS accounts. The investments are made by Pension Funds within the regulated NPS investment framework.
No. PFRDA's latest PoP Exposure Draft was issued on 2 September 2026 and is open for stakeholder comments until 2 October 2026. The proposed amendments therefore remain under consultation as of 19 September 2026 and should not be described as final NPS rules.
07 October 2026
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