Can a private-sector employee withdraw 80% of NPS at 60?

Yes. Under the PFRDA amendment notified in December 2025, non-government subscribers with a corpus above ₹12 lakh can take up to 80% as a lump sum. At least 20% must buy an annuity.

Does the 80% rule apply to government employees?

No. Government subscribers still need to put at least 40% into an annuity when the corpus is above ₹12 lakh. As reported, the small-corpus relief (full withdrawal up to ₹8 lakh at superannuation) applies to them too.

Is the whole 80% lump sum tax-free?

Not as things stand. The law exempts 60% of the corpus and Budget 2026 did not extend this, so the extra 20% may be taxed at your slab rate unless the law changes.

How many partial withdrawals are allowed now?

Up to four before age 60, at least four years apart, each capped at 25% of your own contributions and only for listed purposes such as children's education, a house or medical treatment.

How long can I stay invested in NPS?

Under the amended rules you can defer the lump sum and the annuity purchase up to age 85.

NPS withdrawal rules: lump sum, annuity and early exit

Updated 11 October 2026

When you leave NPS, part of your corpus can be taken as a lump sum and the rest must buy an annuity, a monthly pension from an insurance company. Under PFRDA's amended exit rules, notified in December 2025, non-government subscribers can take up to 80% as a lump sum, while government employees can still take up to 60%. If your corpus is ₹8 lakh or less at normal exit, you can withdraw all of it.

What changed in December 2025

PFRDA notified the PFRDA (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025 in December 2025. The main changes, as published:

Non-government subscribers (All Citizen and corporate) need to annuitise only 20% of the corpus, down from 40%.
Full withdrawal is allowed if the corpus at normal exit is ₹8 lakh or less. The earlier limit was ₹5 lakh.
A new middle slab: with ₹8 lakh to ₹12 lakh, you can take up to ₹6 lakh as a lump sum and draw the rest through Systematic Unit Redemption (SUR) over at least six years, or buy an annuity.
You can stay invested, and put off the lump sum or annuity, up to age 85.
Up to four partial withdrawals are allowed before 60, and regulated lenders can give loans against up to 25% of your own contributions.
For non-government subscribers the five-year lock-in has gone. A normal exit is allowed at 60, after 15 years in NPS, or on retirement under the employer's rules.

Some processes are still being rolled out by the record-keeping agencies, so confirm the current position with your Point of Presence or on the PFRDA website before you apply.

Normal exit: how much you can take

Corpus at exit	Non-government subscriber	Government subscriber
Up to ₹8 lakh	100% lump sum, or phased withdrawal	100% lump sum
₹8 lakh to ₹12 lakh	Up to ₹6 lakh lump sum; rest through SUR (six years or more) or an annuity	Up to ₹6 lakh lump sum; rest through an annuity or phased withdrawal
Above ₹12 lakh	Up to 80% lump sum; at least 20% annuity	Up to 60% lump sum; at least 40% annuity

The government column follows published summaries of the amendment, so government subscribers should confirm the small-corpus limits with their PAO or nodal office. Central government employees who chose the Unified Pension Scheme follow UPS rules instead.

Leaving before 60

If a non-government subscriber exits before becoming eligible for normal exit, at least 80% of the corpus must buy an annuity and up to 20% can be taken in cash. If the corpus is ₹5 lakh or less, all of it can be withdrawn. The same 80:20 rule and ₹5 lakh limit apply to government employees who resign or are removed. Government employees who take voluntary retirement after 20 years are treated differently; see voluntary retirement. If a subscriber dies, the nominee or legal heirs receive the corpus, and non-government nominees can take all of it.

Partial withdrawals while you work

You can withdraw up to 25% of your own contributions (not the employer's, and not the returns) for specific needs: children's higher education or marriage, buying or building a house if you do not already own one other than ancestral property (once only), medical treatment for yourself or your family, or repaying a loan taken against your NPS account. Up to four withdrawals are allowed before 60, at least four years apart. If you stay invested after 60, you can make further withdrawals every three years.

How the money is taxed

Lump sum: 60% of the corpus is tax-free at exit. Budget 2026 did not extend this to 80%, so the extra 20% that non-government subscribers can now take may be taxed at your slab rate unless the law changes.
Annuity: the money used to buy the annuity is not taxed, but the pension it pays is taxable every year.
Partial withdrawals: tax-free within the 25% limit.

Contributions carry their own deductions; see NPS tax benefits and tax on pension.

Worked example. Kavita, a private-sector employee, has ₹40 lakh at 60. She can take up to 80%, or ₹32 lakh, and must put ₹8 lakh into an annuity. At an assumed annuity rate of 6.5% a year, that pays ₹52,000 a year, about ₹4,333 a month. Of her ₹32 lakh, ₹24 lakh (60% of the corpus) is tax-free and the other ₹8 lakh may be taxable. Her cousin in central government service, with the same ₹40 lakh, can take ₹24 lakh and must annuitise ₹16 lakh, which at 6.5% pays ₹1,04,000 a year, about ₹8,667 a month.

Should you take the full lump sum?

More cash gives flexibility, but the annuity is the only part that pays for life. Before choosing 80%, think about how long the money must last, current annuity rates, the tax on the extra 20%, and whether you would rather draw the lump sum in instalments through systematic withdrawal than all at once. Model your corpus with the NPS calculator and compare options in the UPS vs NPS calculator. For the bigger picture, see old pension vs NPS.