The withdrawal regulations of the National Pension System (NPS) in 2026 offer enhanced clarity and adaptability while protecting your retirement corpus. Controlled by the Pension Fund Regulatory and Development Authority (PFRDA), these updated guidelines allow partial withdrawals during service and structured exits following retirement. This set of regulations encourages long-term savings yet guarantees sufficient liquidity for legitimate requirements.
Partial Withdrawals During Active Service
Applicants with 3 years of membership can withdraw up to 25% of their own contributions, exclusive of those of the employer with returns, for an approved scheme. Maximum three partial withdrawals are permitted throughout the whole term of maturity.
| Purpose of Partial Withdrawal | Maximum Limit Allowed | Minimum Membership Required |
|---|---|---|
| Children’s higher education | 25% of own contribution | 3 years |
| Children’s marriage | 25% of own contribution | 3 years |
| Treatment of critical / specified illness | 25% of own contribution | 3 years |
| Purchase or construction of house | 25% of own contribution | 3 years |
| Skill development / self-development activities | 25% of own contribution | 3 years |
Full Withdrawal at Retirement (Age 60 +)
The policy allows exit from the scheme upon reaching 60 years. At least 40% of the pension corpus necessarily must be used to buy an annuity so that a regular pension outcome can be obtained. Consequently, it leaves a window of 60% withdrawal. Full withdrawal is permitted if the corpus does not exceed ₹5 lakhs, with the person ultimately getting to keep the entire pension corpus and not asking to buy an annuity.
Premature Exit Before Age 60
Premature exit is also allowed after 5 years if the subscriber, spouse, or children suffer critical illness, or if the subscriber is slipped into permanent commission. In such circumstances, upon premature exit at least 80% should be annuitized, and not more than 20% can be withdrawn as a lump sum. In case the corpus does not exceed ₹2.5 lakh, full withdrawal is permitted.
Tax Treatment is Applicable from 2026.
A 60% lump-sum payment at retirement is tax-free in the budget. An annuity income is taxable according to the income tax bracket of the subscriber. Partial withdrawals towards approved needs remain tax-exempt.
The updated guidelines for NPS Withdrawal Revision 2026 establish a balanced approach; access where required while ensuring the prosperity of the greater part of the savings for lifelong income. Prior to proceeding, check your status on the authoritative portal of CRA within NSDL (nsdl.co.in or protean-tinpan.com) to confirm your balance and withdrawal eligibility. For personalized planning, seek advice from a financial consultant.
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