Response to Stakeholders - Exposure Draft on Amendments to PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015

Response to Stakeholders - Exposure Draft on Amendments to PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015 Response to Stakeholders - Exposure Draft on Amendments to PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015 The Pension Fund Regulatory and Development Authority (PFRDA), on 16 September 2025, issued the Exposure Draft on the proposed amendments to the PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015, inviting comments and suggestions from stakeholders.

The suggestions were duly examined, and the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025 were subsequently published in the Gazette of India on 16 December 2025. The broad areas of feedback and relevant suggestions received from the concerned stakeholders on the Exposure Draft, along with the PFRDA’s responses on the same, are summarised in the table below.

Sl. Subject Stakeholder Comments of PFRDA matter Comments/Suggestions (in terms of PFRDA (Exits and Withdrawals under the NPS)

(Amendment) Regulations, 2025) 1 Applicability Clarity w.r.t applicability of Regulation (1A) stipulates that the and revised exit/withdrawal provisions regulation in general applies to exits and definitions to government subscribers and withdrawals from the pension schemes alignment of definitions to ensure under the NPS. The regulation thus coverage of both government and applies both to the government and non- non-government coverage in Exit government sectors under NPS.

Regulations may be provided.

2 Flexibility in i) More flexible options to exit i) As per Regulation 4, under All Exit (Non- from NPS may be provided. Citizen Model, the minimum lock in govt) ii) Age-based and lock-in period period of five years, to be eligible for restrictions may be removed. pre-mature exit, has been removed.

iii) Early exit for non-government Further, a vesting period of 15 years subscribers may be enabled. or 60 years of age (whichever is earlier) has been stipulated, to be eligible for normal exit. ii) With regards to corporate sector, the vesting period to be eligible for Page 1 of 7Response to Stakeholders - Exposure Draft on Amendments to PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015 normal exit, remains linked to age of superannuation/retirement, as the same is governed by employer- employee relationship.

3 Providing a) Requirement to purchase i) As per Regulation 4, under non- options to annuity for remaining 20% of government sector, the lump-sum withdraw corpus may be made as optional portion at exit has been enhanced to corpus as instead of compulsory 80%, which can be availed under the other than annuitization. Systematic Lump sum Withdrawal annuity b) Complete corpus utilization via (SLW) or Systematic Unit long-duration SUR/SWP for Redemption (SUR) facility.

large balances in lieu of ii) Further, the following corpus-linked annuity, if the subscriber flexibility has been enabled for both prefers, may be enabled. government and non-government

sector subscribers: a) Corpus ≤ ₹8 lakh:

100% lumpsum or SLW or SUR

(or) Up to 80% lumpsum & At least 20% annuity b) Corpus > ₹8 lakh ≤ ₹12 lakh:

Up to ₹6 lakh as lumpsum and balance as SUR for min. 6 years or annuity.

(or) Up to 80% lumpsum & At least 20% annuity c) Corpus > ₹12 lakh:

Up to 80% lumpsum & At least 20% annuity.

Page 2 of 7Response to Stakeholders - Exposure Draft on Amendments to PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015 iii) The purchase of annuity is in line with the PFRDA Act, aimed at ensuring retirement security.

4 Parity across i) Higher lump-sum access and i) Under the Government sector, NPS sectors lower annuity compulsion for serves as the primary retirement government sector exits to product for subscribers and to the mirror non-government nominee(s)/legal heir(s) in case of flexibility, may be enabled. death of the subscriber.

ii) 100% lump-sum pay out to ii) The lump-sum portion for nominees/legal heirs across Government sector subscribers in the sectors with SUR/annuity as amended regulation remains at 60% options may be allowed in upon superannuation and at 20% death cases to ensure liquidity upon death, as reflected in and parity. Regulation 3. Further, corpus-linked flexibility has been enabled for both government and non-government sector subscribers for corpus up to ₹12 lakhs as mentioned in Sl.

No.3(ii). iii) The above measures are in place to balance flexibility with long-term retirement security ensuring a significant portion of the corpus is allocated to annuity to provide sustained post-retirement income.

5 Increase and Increase lump-sum limits (e.g., ₹12 i) Under the amended regulations for index lump lakh to ₹50 lakh; NPS-Lite ₹2 lakh NPS, the lump sum limit at pre- sum to ₹10–20 lakh) and index annually mature exit has been increased from thresholds to inflation to preserve real value. ₹2.5 lakh to ₹5 lakh (Regulations 3(1)(b) and 4(1)(b)) and at normal exit from ₹5 lakh to ₹8 lakh, with a structured pay out option for corpus Page 3 of 7Response to Stakeholders - Exposure Draft on Amendments to PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015 between ₹8 lakh till ₹12 lakh, as mentioned in Sl. No.3(ii) (Regulations 3(1)(a) and 4(1)(a)), to enhance flexibility and greater choice to subscribers.

ii) PFRDA has been examining/reviewing the lump sum limits from time to time basis various factors, keeping in view the flexibility for subscribers while ensuring old age income security and maintaining long-term pension accumulation.

6 Safeguarding The exit after completion of 15 i) The vesting period of 15 years under the provision years may be made stricter by All Citizen Model stipulated under permitting introducing requirements such as Regulation 4 is intended as an exit after minimum contribution-years, option rather than an exit trigger, completing15- higher annuity share for early exits, with higher annuity share for year vesting minimum corpus thresholds. premature exits.

period (All ii) While suggestions on additional Citizen safeguards viz. minimum Model) contribution years, minimum corpus for 15‑year exits were noted, these have not been considered to keep the product/exit provisions simple.

iii) The measures in general aim to provide subscribers greater flexibility, choice, and autonomy in investment decisions and managing their accumulated pension wealth, recognizing that non-government NPS participation is voluntary.

Page 4 of 7Response to Stakeholders - Exposure Draft on Amendments to PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015 iv) Clear and well-structured exit provisions with various choices are expected to encourage entry and sustain participation by balancing subscriber needs and pension objectives across different stages of their life cycle.

7 NPS Vatsalya At age 18, Presently, NPS-Vatsalya shall continue i) Partial/full lump-sum for to be governed by the existing education/wedding/medical or Guidelines issued by PFRDA in the past. deferral of annuity may be Under the amended regulations, allowed; enabling provisions have been ii) 80% annuitisation at age 18 incorporated under Regulation 4A to may be revisited; provide for ‘specific purpose schemes’, iii) Limited partial withdrawals including NPS-Vatsalya, which shall be during accumulation with governed by scheme-specific safeguards may be considered. Guidelines. The suggestions received in respect of NPS-Vatsalya have been taken note of, and revised Guidelines for the scheme shall be stipulated separately.

8 Financial In case of enabling loans against In terms of Regulation 6(1)(b), a Assistance NPS, the provisions may be built to subscriber may avail financial assistance against cap exposure (e.g., 25%), mandate from a regulated financial institution, accumulated time-bound repayments with and such institution may mark a lien or pension interest, limit to one outstanding charge on the individual pension account wealth loan, and set minimum up to 25% of the subscriber’s own accumulation period to protect contributions, i.e., within the limits retirement adequacy. applicable for partial withdrawal. The operational aspects shall be governed by guidelines to be issued separately by the Authority.

Page 5 of 7Response to Stakeholders - Exposure Draft on Amendments to PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015 9 Tax benefits Tax treatment for any enhanced Tax provisions upon exit / withdrawals lump-sum beyond current 60% under the NPS shall be as per extant may be clarified. Income Tax Act.

10 Partial i) Unemployment/financial i) PFRDA Act 2013 provides for withdrawals hardship may be added as withdrawals, not exceeding twenty- grounds of partial withdrawal. five per cent of the contribution ii) Post-retirement drawdown made by the subscriber, from the (auto SUR/SWP) may be individual pension account.

simplified, ii) The revision in respect of purposes iii) Calculating the eligibility for of partial withdrawal as in partial withdrawal on corpus Regulation 8(1)(A) seek to (not only own contributions) rationalize and streamline the with increased on framework by retaining only those frequency/limits may be purposes that are objective and considered. directly linked to essential needs of the subscriber.

iii) Further, in terms of Regulation 8(1)(C), partial withdrawals are now permitted with interval of four years & up to four times before age 60/superannuation, and with an interval of three years after age 60/superannuation.

11 Impact on Impact of revised exit framework Regulation 5 governs exit provisions for NPS-Lite on Swavalamban subscribers may NPS-Lite Swavalamban subscribers.

Swavalamban be clarified. The revision is intended to provide greater flexibility by increasing the lump sum withdrawal limit to ₹2 lakh at normal and premature exit, with the remaining provisions continuing unchanged.

Page 6 of 7Response to Stakeholders - Exposure Draft on Amendments to PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015 12 Illustration Clear comparative illustrations of Schedule I has been incorporated in the framework different exit options may be revised Regulations to provide clarity on published. the benefits available under various exit scenarios linked to the size of the corpus.

Illustrative examples shall be provided separately through FAQs.

13 Definition of Family/family members for death, Regulation 32 of the PFRDA (Exits and Family disability and invalidation exits Withdrawals under the NPS) may be explicitly defined Regulations, 2015 (as amended) already stipulates a contextual definition of ‘family’ for the purpose of nomination.

In addition, the amendment removes the dependency requirement in respect of parents, wherever such reference existed in the said Regulation, thus widening the eligibility for nomination.

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