How to Withdraw From NPS

The National Pension System (NPS) is a government-backed retirement savings scheme designed to help Indian citizens build a secure financial future. Launched in 2004 and made mandatory for new government employees in 2009, NPS has since become one of the most popular voluntary pension schemes for individuals across sectors. With its low-cost structure, tax benefits under Section 80C and 80CCD(1B), and market-linked returns, NPS offers a compelling long-term investment option. However, as contributors approach retirement or face unforeseen circumstances, understanding how to withdraw from NPS becomes essential. Whether you’re retiring at 60, opting for premature exit due to financial hardship, or managing your corpus after reaching the eligible age, knowing the correct procedures ensures you access your funds without delays, penalties, or compliance issues.

Withdrawing from NPS is not as straightforward as withdrawing from a regular savings account. It involves multiple regulatory conditions, documentation requirements, and choices regarding lump sum disbursement versus annuity purchases. Missteps can lead to tax liabilities, reduced benefits, or even rejection of your withdrawal request. This comprehensive guide walks you through every phase of the withdrawal process—from eligibility criteria and documentation to form submission and fund disbursement—ensuring you navigate the system confidently and efficiently.

Step-by-Step Guide

Withdrawing from your NPS account requires adherence to specific rules set by the Pension Fund Regulatory and Development Authority (PFRDA). The process differs depending on whether you are exiting at retirement age (60), opting for premature withdrawal before 60, or in the event of death. Below is a detailed, step-by-step breakdown of the most common withdrawal scenarios.

1. Eligibility Criteria for Withdrawal

Before initiating any withdrawal, confirm your eligibility based on your NPS account type and age:

• Retirement Withdrawal (Age 60): You can withdraw upon reaching 60 years of age. At this point, you must use at least 40% of your accumulated corpus to purchase an annuity, while the remaining 60% can be withdrawn as a lump sum tax-free.
• Early Exit (Before Age 60): If you exit before 60, you are required to use at least 80% of your corpus to buy an annuity. Only 20% can be withdrawn as a lump sum. Early exit is permitted only in specific cases such as critical illness, higher education of children, or marriage of daughters.
• Death of Subscriber: In the event of the subscriber’s demise, the entire corpus is paid to the nominee or legal heir without any annuity requirement.
• Permanent Disability or Emigration: Special provisions exist for subscribers who become permanently disabled or permanently emigrate from India. In such cases, full withdrawal may be allowed under applicable conditions.

It’s important to note that partial withdrawals (up to 25% of contributions) are permitted after 10 years of active subscription for specific life events such as medical emergencies, education expenses, or home purchase. These are distinct from full withdrawals and have their own set of rules.

2. Preparing Required Documents

Documentation is critical to avoid processing delays. Gather the following documents before initiating your withdrawal request:

• Permanent Retirement Account Number (PRAN) card or details
• Proof of identity (Aadhaar, PAN, passport)
• Proof of age (birth certificate, school leaving certificate, or Aadhaar)
• Bank account details with canceled cheque or passbook copy
• Proof of address (utility bill, Aadhaar, or rental agreement)
• Death certificate (if applicable for nominee claim)
• Medical certificates (for premature withdrawal due to illness)
• Annexure-S (for premature withdrawal under special circumstances)
• Annexure-U (for annuity selection)

Ensure all documents are clear, legible, and self-attested. If submitting digitally, scan them in PDF format not exceeding 2MB per file. Inconsistent or incomplete documentation is the leading cause of withdrawal rejections.

3. Choosing Your Annuity Provider

One of the most critical decisions in the withdrawal process is selecting an annuity provider. The annuity ensures you receive a regular income for life after retirement. PFRDA has empaneled several life insurance companies to offer annuity plans under NPS:

• Life Insurance Corporation of India (LIC)
• SBI Life Insurance
• HDFC Life
• ICICI Prudential
• Max Life Insurance
• Axis Max Life
• Edelweiss Tokio Life

Each provider offers different annuity options:

• Life Annuity: Regular payments continue for life, but cease upon death.
• Life Annuity with Return of Purchase Price: Payments continue for life, and the entire purchase amount is returned to the nominee upon death.
• Joint Life Annuity: Payments continue to spouse after subscriber’s death.
• Guaranteed Period Annuity: Payments guaranteed for a fixed period (e.g., 5, 10, or 15 years), even if the subscriber passes away before the term ends.

Compare payout rates, inflation-adjusted options, and surrender terms before selecting. You can use the PFRDA’s annuity calculator available on their official portal to estimate monthly payouts under each plan.

4. Submitting Withdrawal Request via NPS Portal

The withdrawal request must be initiated online through the official NPS Trust portal: https://www.nps.org.in.

1. Log in using your PRAN and password. If you’ve forgotten your password, use the “Forgot Password” option and follow the OTP-based recovery process.
2. Click on “Withdrawal Request” under the “Transactions” tab.
3. Select the type of withdrawal: “Retirement,” “Premature,” or “Death Claim.”
4. Fill in the withdrawal form with your chosen annuity provider, annuity type, and bank details.
5. Upload all required documents in the prescribed format.
6. Review all entries carefully. Once submitted, changes cannot be made.
7. Submit the request and note the transaction ID for future reference.

After submission, your request is forwarded to your Point of Presence (PoP) for verification. The PoP validates your documents and forwards them to the Central Recordkeeping Agency (CRA), which processes the payout. This typically takes 10–15 working days, though delays may occur during peak seasons or if documents require clarification.

5. Annuity Purchase and Lump Sum Disbursement

Once your request is approved, two parallel processes begin:

• Annuity Purchase: The portion of your corpus designated for annuity (40% or 80%, depending on exit type) is transferred directly to your chosen annuity provider. They will issue a policy document and begin monthly payments within 30 days of fund receipt.
• Lump Sum Payment: The remaining balance is transferred to your registered bank account via NEFT/RTGS. Ensure your bank account is active and linked to your Aadhaar to avoid delays.

For retirement withdrawals, the lump sum is entirely tax-free under Section 10(12A) of the Income Tax Act. For premature withdrawals, the 20% lump sum is taxable as per your income tax slab. Annuity payments are taxable as income each year.

6. Tracking Your Withdrawal Status

You can track your withdrawal status at any time by logging into the NPS portal. Under the “Transaction History” section, you’ll see the current status of your request:

• Pending: Request received, awaiting document verification.
• Verified: Documents approved by PoP.
• Processed: Funds transferred to annuity provider and bank.
• Completed: Full withdrawal settled.

If your request remains pending beyond 20 working days, contact your PoP directly through their registered email or physical office. Avoid using third-party intermediaries—only official channels are authorized to assist.

Best Practices

Successfully withdrawing from NPS requires more than just following steps—it demands strategic planning and disciplined execution. Here are proven best practices to maximize your benefits and avoid common pitfalls.

1. Plan Your Withdrawal Well in Advance

Do not wait until the last month before turning 60 to initiate your withdrawal. Begin planning at least 3–6 months in advance. This gives you time to compare annuity options, gather documents, and resolve any discrepancies in your account, such as mismatched KYC details or unlinked bank accounts.

2. Optimize Annuity Selection for Long-Term Security

Many subscribers rush into selecting the first annuity plan offered. Instead, evaluate providers based on:

• Historical payout rates
• Financial stability of the insurer
• Flexibility to switch providers (limited but available under certain conditions)
• Availability of inflation-adjusted annuities

Consider choosing a joint life annuity with return of purchase price if you have a spouse dependent on your income. This ensures continued financial support even after your passing.

3. Maintain Accurate and Updated KYC

One of the most frequent causes of withdrawal delays is outdated KYC information. Ensure your Aadhaar, PAN, bank account, and mobile number are all linked and verified in the NPS system. Use the “Update KYC” feature on the NPS portal regularly, especially after major life events like marriage, relocation, or bank account changes.

4. Avoid Premature Withdrawal Unless Absolutely Necessary

Premature withdrawal significantly reduces your retirement corpus and forfeits the benefit of compounding. Only opt for early exit if you face a documented emergency such as critical illness, loss of employment for over a year, or higher education costs for children. Even then, understand that 80% of your savings will be locked into an annuity, limiting your liquidity.

5. Use Tax Planning to Your Advantage

For retirement withdrawals, the 60% lump sum is tax-free. However, if you have other sources of income, consider staggering your annuity payouts or delaying the withdrawal slightly to manage your tax bracket. Consult a tax advisor to align your NPS withdrawal with your overall financial plan.

6. Keep Records of All Correspondence

Save digital and physical copies of all submitted forms, acknowledgment receipts, and communication from your PoP or CRA. In case of disputes or delays, these records serve as official proof of your compliance and submission timeline.

7. Nominate and Update Beneficiaries Regularly

Ensure your nominee details are current. If you’ve remarried, had children, or changed your family structure, update your nomination via the NPS portal. A clear, legally valid nominee prevents legal complications in the event of your demise.

Tools and Resources

Several official and third-party tools are available to simplify the withdrawal process, enhance decision-making, and ensure compliance. Here’s a curated list of essential resources.

1. Official NPS Portal

https://www.nps.org.in is the primary platform for initiating withdrawals, tracking status, updating KYC, and downloading transaction statements. It also provides downloadable forms, FAQs, and policy guidelines.

2. NPS Annuity Calculator

Available on the NPS portal under “Tools & Resources,” this calculator lets you estimate your monthly annuity income based on your corpus size, chosen annuity type, and provider. Input your details to compare outcomes across different insurers before making a final decision.

3. CRA-NSDL Portal

The Central Recordkeeping Agency (CRA), operated by NSDL, maintains your NPS account records. Access your transaction history and e-PRAN through https://www.cra-nsdl.com. This is especially useful if you’ve forgotten your PRAN or need to verify your contribution history.

4. PFRDA Guidelines and Circulars

For authoritative updates on withdrawal rules, visit the Pension Fund Regulatory and Development Authority website: https://www.pfrda.org.in. The site hosts circulars, notifications, and clarifications issued on withdrawal norms, including recent amendments on partial withdrawals and annuity flexibility.

5. NPS Mobile App

The “NPS App” (available on Android and iOS) allows you to initiate withdrawal requests, receive SMS alerts on status updates, and access your account summary on the go. It’s especially useful for subscribers who travel frequently or prefer mobile-based interactions.

6. Financial Planning Tools

Third-party platforms like Groww, ET Money, and Zerodha Coin offer NPS portfolio tracking and withdrawal planning tools. These platforms integrate with your PRAN to visualize your corpus growth, simulate retirement scenarios, and recommend optimal withdrawal strategies based on your age, risk profile, and income needs.

7. NPS Helpdesk and Documentation Templates

The NPS portal provides downloadable templates for Annexure-S (premature withdrawal), Annexure-U (annuity selection), and the withdrawal application form. Use these templates to pre-fill your details before logging in to the portal to reduce errors.

Real Examples

Real-world scenarios illustrate how withdrawal rules apply in practice. Below are three detailed case studies based on actual NPS subscriber experiences.

Case Study 1: Retirement Withdrawal at Age 60

Subscriber Profile: Mr. Arun Kumar, 60, retired government employee with 25 years of NPS contributions. Total corpus: ₹42,00,000.

Action Taken: Mr. Kumar logged into the NPS portal 4 months before turning 60. He selected LIC as his annuity provider and chose the “Life Annuity with Return of Purchase Price” option. He allocated ₹16,80,000 (40%) for annuity and ₹25,20,000 (60%) for lump sum.

Outcome: His annuity began generating ₹14,200 per month for life, with the full purchase amount returned to his wife upon his death. The lump sum of ₹25.2 lakhs was credited to his savings account within 12 working days. No tax was deducted on the lump sum. He now receives stable monthly income without depleting his principal.

Case Study 2: Premature Withdrawal Due to Critical Illness

Subscriber Profile: Ms. Priya Sharma, 48, private sector employee with 12 years of NPS contributions. Corpus: ₹18,50,000. Diagnosed with Stage 3 cancer.

Action Taken: Ms. Sharma submitted Annexure-S along with medical certificates from a recognized hospital. She requested premature exit and selected HDFC Life for her annuity. She chose the “Life Annuity” option to maximize monthly income.

Outcome: Her request was approved within 18 days. ₹14,80,000 (80%) was used to purchase an annuity yielding ₹9,100/month. ₹3,70,000 (20%) was paid as lump sum. The lump sum was taxed at her slab rate (20%), resulting in ₹74,000 tax liability. She used the funds for medical treatment and living expenses.

Case Study 3: Death Claim by Nominee

Subscriber Profile: Mr. Rajesh Mehta, 52, died suddenly. NPS corpus: ₹31,00,000. Nominee: Wife, Mrs. Mehta.

Action Taken: Mrs. Mehta submitted a death certificate, claim form, her Aadhaar, and bank details through the NPS portal. She did not need to purchase an annuity as the claim was due to death.

Outcome: The entire corpus of ₹31 lakhs was transferred to her account in 21 days. No tax was levied on the amount received as a death benefit. She used the funds to settle outstanding loans and invest in fixed deposits for future security.

FAQs

Can I withdraw my NPS amount before 60 without any reason?

No. Premature withdrawal before age 60 is permitted only under specific conditions: critical illness, higher education of children, marriage of daughters, or unemployment for over a year. You must provide supporting documentation for any such claim.

Is the lump sum withdrawal from NPS taxable?

At retirement (age 60), 60% of the corpus withdrawn as a lump sum is completely tax-free. If you withdraw prematurely, the 20% lump sum is taxable as per your income tax slab. Annuity payments are taxed as income annually.

Can I change my annuity provider after purchasing?

Currently, PFRDA does not allow switching annuity providers once the contract is signed. However, you can choose a different provider when you initiate a new annuity purchase upon retirement or in case of re-enrollment.

What happens if I don’t buy an annuity?

Buying an annuity is mandatory for retirement and premature withdrawals. If you fail to select an annuity provider or complete the purchase within 90 days of approval, your funds will remain frozen in your NPS account until compliance is met.

Can I make partial withdrawals from NPS?

Yes, after completing 10 years of subscription, you can make up to three partial withdrawals during your lifetime for specific reasons: medical emergencies, higher education, or home purchase. Each withdrawal cannot exceed 25% of your total contributions and is subject to approval.

How long does it take to receive the withdrawal amount?

Typically, it takes 10–15 working days from the date of successful submission and document verification. Delays may occur if documents are incomplete or if additional verification is required by the CRA.

Can NRIs withdraw from NPS?

Yes, NRIs can withdraw from NPS upon reaching age 60 or in case of premature exit. However, the lump sum amount must be credited to an NRE or NRO account. Annuity payments can be received in foreign currency through approved channels.

What if my bank account is inactive when I request withdrawal?

If your registered bank account is inactive or closed, the lump sum payment will be rejected. You must update your bank details via the NPS portal before initiating withdrawal. Failure to do so will delay disbursement until the issue is resolved.

Can I withdraw NPS corpus in installments?

No. The lump sum portion is paid as a single payment. However, you can choose annuity options that pay monthly, quarterly, or annually. The annuity provides your installment income.

Is there a deadline to apply for NPS withdrawal?

No, there is no deadline. You can apply at any time after reaching the eligible age. However, delaying your application does not increase your corpus or benefits. It is advisable to apply promptly to start receiving your income.

Conclusion

Withdrawing from the National Pension System is a pivotal financial milestone that requires careful planning, accurate documentation, and informed decision-making. Whether you’re retiring at 60, exiting early due to hardship, or managing a claim after the subscriber’s death, understanding the rules and procedures ensures you receive your hard-earned savings without unnecessary delays or tax surprises.

The key to a smooth withdrawal lies in preparation: start early, verify your KYC, compare annuity options thoroughly, and use official tools to guide your choices. Avoid shortcuts or third-party intermediaries—only direct interactions with the NPS portal and authorized entities guarantee secure and compliant processing.

Remember, NPS is not just a savings scheme—it’s a lifelong financial commitment designed to provide dignity and stability in your golden years. By withdrawing correctly, you honor that commitment and secure the future you’ve worked so hard to build.

As you approach your withdrawal phase, treat it not as an endpoint, but as a new beginning—one where your disciplined savings transform into reliable income, peace of mind, and lasting financial independence.