NPS Withdrawal at 60: How to Access Your Retirement Savings in India

When you reach 60, the NPS, National Pension System, a government-backed retirement savings plan in India. Also known as National Pension Scheme, it’s designed to help you build a steady income after you stop working. At 60, you can start withdrawing money from your NPS account—but there are strict rules on how much you can take out, how much you must use to buy an annuity, and what gets taxed. Many people assume they can take all their savings as cash, but that’s not allowed. The rules are clear: you must use at least 40% of your corpus to buy a lifetime annuity. The rest? That’s where you get flexibility.

The annuity, a financial product that pays you regular income for life is mandatory, but you choose the provider and payout type—monthly, quarterly, or yearly. If you don’t buy an annuity, your withdrawal gets blocked. The remaining 60% can be taken as a lump sum, and here’s the good part: that portion is completely tax-free. No income tax, no TDS. This tax-free benefit is unique to NPS and doesn’t apply to EPF or PPF. But remember, if you withdraw before 60, or if you don’t meet the 40% annuity rule, the tax treatment changes completely. The tax-free withdrawal, the 60% lump sum you can access without paying tax at age 60 is one of the biggest advantages of NPS over other retirement plans.

What if you’re still working at 60? You can delay withdrawal until 70, letting your money grow longer. Or if you retire early, you can still start NPS withdrawal at 60—no penalty. But if you’re in a job that lets you contribute through payroll (like government or corporate employees), your employer’s match also counts toward your corpus. That’s extra money you didn’t have to save yourself. And if you’ve invested in NPS through Section 80C, you’ve already claimed tax savings on those contributions—so the withdrawal rules are designed to balance past benefits with future income security.

People often mix up NPS withdrawal with mutual fund redemptions or EPF withdrawals. But NPS is different. It’s not just a savings account—it’s a structured retirement system. You can’t treat it like a fixed deposit you can break anytime. The 40% annuity rule forces discipline. It’s meant to prevent you from spending your entire retirement fund in the first year. And while the lump sum is tax-free, the annuity payments you receive every month? Those are taxable as income. So your monthly pension is added to your other income and taxed at your slab rate.

There’s also an option to withdraw up to 25% of your own contributions (not including employer contributions) as a lump sum before 60, but only under specific conditions like critical illness or higher education. That’s not the same as retirement withdrawal. At 60, you’re locked into the full rules: 40% annuity, 60% tax-free cash. No exceptions.

What you’ll find in the posts below are real, practical guides on how to plan your NPS withdrawal at 60. You’ll see how to calculate your expected annuity income, how to compare providers, how to avoid tax traps, and how to combine NPS with other savings like PPF or mutual funds to build a reliable retirement income. Some posts break down the math. Others show how others have used their lump sum—whether to pay off a home loan, fund travel, or start a small business. No fluff. Just what you need to make smart, confident decisions when your retirement savings become available.