National Pension Scheme (NPS) helps Indians secure their retirement. By 2024, it boasts ₹11.27 lakh crore in assets (PFRDA). But what happens when you want to access these funds? Knowing the withdrawal and exit rules is key. First, let’s explore how NPS handles your money at different stages.
Exiting at Retirement (Age 60)
National Pension Scheme offers clear options at 60. You must use at least 40% of your savings to buy an annuity for regular income. The rest comes as a lump sum. For example, if your corpus is ₹10 lakh, ₹4 lakh goes to an annuity, and you pocket ₹6 lakh. However, if it’s ₹5 lakh or less, you can withdraw it all. Besides, you can delay withdrawal until 75 if you’re still working. This flexibility suits many. Annuity rates vary—7.5% to 9% in 2024 (Zerodha Varsity)—so compare providers wisely.
Partial Withdrawals Before Retirement
Need cash early? National Pension Scheme allows partial withdrawals after 3 years. You can take up to 25% of your contributions—not the total corpus—for specific needs. These include medical emergencies, education, or buying a home. For instance, if you’ve put in ₹2 lakh and it grows to ₹2.5 lakh, you can withdraw ₹50,000 max. You get three chances during your NPS tenure. Moreover, this option helps without breaking your retirement plan. Still unsure about savings? Check “Saving vs Investing: Where should you put your money?” on Artho Shots.
Premature Exit Before 60
What if you want out early? National Pension Scheme permits premature exits after 5 years. Rules differ based on your corpus size. If it’s over ₹2.5 lakh, 80% must fund an annuity, leaving 20% as cash. Say your corpus is ₹4 lakh—you get ₹80,000, and ₹3.2 lakh buys an annuity. But if it’s ₹2.5 lakh or less, take it all. This strict split ensures income later. Therefore, think twice before exiting early. It’s a long-term game.
What Happens on Death?
National Pension Scheme protects your loved ones too. If a subscriber passes away, the entire corpus goes to the nominee. No annuity rules apply here. For example, a ₹15 lakh fund transfers fully—offering peace of mind. In addition, nominees can choose how to use it—lump sum or annuity. This feature sets NPS apart from rigid plans. Curious about regulations? Visit PFRDA Official Site. The PFRDA keeps NPS fair and transparent.
In conclusion, National Pension Scheme balances flexibility and security. At 60, you mix lump sums with annuities. Before that, partial withdrawals cover emergencies, while premature exits favor annuities. Plus, nominees inherit fully if tragedy strikes. With ₹11.27 lakh crore under management, NPS proves its scale. Start early to grow your corpus—small steps today mean big rewards later. Want more retirement tips? Explore our planning guides now!