NPS Withdrawal Rules: How to Access Your Retirement Funds in India

When you invest in the National Pension System, a government-backed retirement savings scheme in India that lets you build a pension corpus through regular contributions. Also known as NPS, it’s one of the most tax-efficient ways to save for retirement under Section 80C and 80CCD(1B). But knowing how to contribute is only half the battle—you need to understand the NPS withdrawal rules before you can actually access your money.

The NPS has two account types: Tier 1 and Tier 2. Tier 1 is mandatory and locked until retirement, while Tier 2 is voluntary and works more like a savings account—you can withdraw anytime, for any reason. For Tier 1, you can’t touch the money before age 60. At 60, you must use at least 40% of your corpus to buy an annuity that gives you a monthly pension. The remaining 60% is tax-free if withdrawn as a lump sum. If you retire early, say at 58, you still need to use 80% for an annuity and can only take 20% as cash. If you exit before 60 for any other reason, like changing jobs or medical emergencies, you can only withdraw 20% of your total savings—the rest must go into an annuity.

There’s also a special rule for partial withdrawals from Tier 1 after 10 years of contribution. You can withdraw up to 25% of your own contributions (not including employer contributions) for specific needs like your child’s education, marriage, or buying a home. But you’re limited to three withdrawals total during your lifetime. And if you die before retirement, your nominee gets the entire balance without any tax or annuity rules.

Don’t confuse NPS with other tax-saving tools like PPF or ELSS. NPS is unique because it forces discipline—you can’t just pull out money whenever you want. That’s the whole point. But if you plan ahead, the tax benefits and long-term growth make it one of the smartest retirement moves in India. Below, you’ll find detailed guides on how to apply for withdrawal, what documents you need, how taxes apply, and how to avoid costly mistakes that many investors make when they finally reach retirement.