NPS Entry and Exit Age Raised to 85: How the 2025 Amendment Lets You Stay Invested Longer

Until December 2025, a National Pension System (NPS) subscriber could join only up to the age of 70 and had to leave by 75. The PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025, dated 16 December 2025 and announced in a PFRDA press release on 19 December 2025, raised both ceilings to 85 years. The same amendment removed the old rule that a subscriber had to file a request at least 15 days before turning 60 to keep the account running. Continuation is now automatic.

For a retiree weighing whether to draw down at 60 or stay invested for another 10 or 25 years, those three changes reshape the decision. This guide explains what the amendment actually says, how the tax rules apply when you finally exit, and what deferral can look like on a Rs 1 crore corpus. Every rule below is taken from the PFRDA amendment and the Income-tax Act; the growth figures in the worked example are labelled assumptions, not forecasts.

The Scheme Explained

The NPS is a defined-contribution pension scheme regulated by the Pension Fund Regulatory and Development Authority under the PFRDA Act, 2013. Your contributions are invested by pension fund managers, the value moves with the market, and at exit a portion must be used to buy an annuity from an insurer. The December 2025 amendment changed four things that matter for anyone near or past 60.

1. Entry and exit ages raised to 85

Item 20 of PFRDA's before-and-after table raises the maximum entry age and the maximum exit age to 85 years. Before the amendment, the joining ceiling stood at 70 and the leaving ceiling at 75. In practical terms, a 72-year-old who could not open an account in 2025 can now open one, and a subscriber who turned 60 in 2026 can keep the corpus invested for up to 25 more years.

2. No more 15-day prior intimation

Item 21 removes the requirement to give 15 days' prior intimation before 60 or superannuation to continue the account or defer the lump sum or annuity. This applies across all sectors. From 19 December 2025, the account simply continues under NPS unless you initiate an exit.

3. No 3-year vesting for late joiners

Item 9 removes the earlier 3-year vesting period that applied to individuals joining NPS after 60 under the All Citizen Model before they could make a normal exit. A subscriber who opens an account at 66 is therefore no longer locked into a fixed 3-year wait before a normal exit becomes available.

4. A new exit split for the non-government sector

The amendment also raised the maximum lump sum for the non-government sector (All Citizen Model and Corporate Sector) to 80 per cent, with a minimum of 20 per cent used to buy an annuity. The government sector stays at 60 per cent lump sum and 40 per cent annuity (item 14 of the PFRDA table), and NPS-Lite also stays at 60/40 (item 26). The small-corpus thresholds differ by sector, as the table shows.

Source: PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025; PFRDA press release, 19 December 2025.

Partial withdrawals while you stay invested

Deferral does not mean the money is frozen. Under the amended rules, a partial withdrawal may be up to 25 per cent of your own contributions (excluding the employer's share and investment returns), after at least 3 years in the scheme. Before 60 you can make up to 4 such withdrawals with a gap of at least 4 years between them. After 60 there is no cap on the number, only a minimum interval of 3 years between withdrawals. For a subscriber who has personally contributed Rs 40 lakh, one partial withdrawal can be up to Rs 10 lakh.

NPS deferral versus moving to SCSS

The usual alternative at 60 is to exit NPS and park the lump sum in a fixed-income product such as the Senior Citizens' Savings Scheme. SCSS pays 8.2 per cent for the October to December 2026 quarter (Q3 FY 2026-27), unchanged in the Finance Ministry's notification of 30 September 2026. The comparison is between a known, quarterly-reset rate and a market-linked corpus with no fixed return.

You can model both paths with Oquilia's SCSS calculator and the NPS calculator.

Tax on Withdrawal

The amendment raised the withdrawal limit, but PFRDA cannot change the Income-tax Act, 1961. That gap is the most important tax fact for any NPS subscriber planning an exit after 19 December 2025.

The lump sum: 80 per cent withdrawable, 60 per cent covered by Section 10(12A)

Section 10(12A) of the Income-tax Act exempts the payment received on closure of the NPS account or on opting out "to the extent it does not exceed sixty per cent of the total amount payable". That 60 per cent ceiling has applied since 1 April 2020. A non-government subscriber may now take up to 80% as a lump sum, but Section 10(12A) exempts it only up to 60% of the total amount payable. On a Rs 1 crore corpus, that leaves a Rs 20 lakh slice whose treatment does not follow from Section 10(12A).

We have not found a Finance Act amendment that aligns Section 10(12A) with the new 80 per cent limit. Until one is on record, do not assume the slice between 60 and 80 per cent is tax-free, and do not assume it is taxable either. Ask your chartered accountant or check the current text of the Act on indiacode.nic.in before you exercise the full 80 per cent.

Partial withdrawals: Section 10(12B)

Section 10(12B) exempts a partial withdrawal up to 25 per cent of the contributions made by the subscriber. Because the PFRDA limit is also 25 per cent of own contributions, the tax exemption and the withdrawal limit still line up. A Rs 10 lakh withdrawal against Rs 40 lakh of own contributions falls fully within that exemption.

Annuity income: taxed at your slab rate

The annuity you buy with at least 20 per cent of the corpus pays a regular pension, and that pension is taxable as income in the year you receive it. There is no special exemption for NPS annuity income. Under the new tax regime introduced by Finance Act 2025 for FY 2025-26, the slabs are as follows.

The Section 87A rebate under the new regime is up to Rs 60,000 where taxable income does not exceed Rs 12 lakh, so a retiree whose annuity and other taxable income stay within Rs 12 lakh pays no income tax under the new regime. Health and education cess of 4 per cent applies on top of any tax payable. Check your figures on the incometax.gov.in portal before filing.

Why deferral can help on tax

Deferral changes when tax events happen, not the rules themselves. Every year you stay invested to 85, the corpus grows inside NPS with no tax charged on the growth until exit. Partial withdrawals every 3 years after 60 let you draw cash under the Section 10(12B) exemption without triggering the exit split.

Worked Drawdown

The example below uses a Rs 1 crore corpus held by a non-government (All Citizen Model) subscriber who turns 60 in 2026 and makes no further contributions. The 6 per cent and 8 per cent annual returns are assumptions chosen for illustration only; NPS returns are market-linked and not guaranteed, and real results can be lower or higher.

Step 1: how the corpus could grow if you stay invested

Before the amendment, the last row in this table was out of reach: the account had to close by 75. Under the 2025 rules, years 15 to 25 of deferral are now available, which at the 8 per cent assumption is the difference between Rs 317.22 lakh and Rs 684.85 lakh.

Step 2: what you receive at exit

Applying the post-amendment non-government split and the Section 10(12A) cap to three exit ages, at the 8 per cent assumption:

Two things stand out. First, the slice between 60 and 80 per cent grows with the corpus, so the unresolved tax question becomes larger the longer you defer: Rs 20 lakh at 60, Rs 136.97 lakh at 85 on these assumptions. Second, a subscriber who wants the whole lump sum to stay within the Section 10(12A) cap can simply withdraw 60 per cent and put the remaining 40 per cent into the annuity, which the 80/20 rule permits because 20 per cent is a minimum, not a maximum.

Step 3: funding living costs while deferring

Deferral only works if you can pay your bills between 60 and the exit age. A practical sequence for the subscriber in this example, with Rs 40 lakh of own contributions:

1. Age 63: after the 3-year minimum in the scheme is satisfied, make a partial withdrawal of up to 25 per cent of own contributions, which is Rs 10 lakh, exempt under Section 10(12B).
2. Age 66 onwards: further partial withdrawals are allowed at intervals of at least 3 years, with no cap on the number after 60. Each one is still limited to 25 per cent of own contributions, so confirm the eligible amount with your Central Recordkeeping Agency before applying.
3. Other income: use SCSS interest at 8.2 per cent (October to December 2026 rate) or other savings for the remaining gap.
4. Final exit, any age up to 85: take up to 80 per cent as a lump sum, keeping in mind that only 60 per cent is covered by Section 10(12A), and use at least 20 per cent for the annuity.

To stress-test the sequence, run your own numbers through the retirement drawdown calculator and compare an annuity against a systematic withdrawal plan with the annuity vs SWP calculator.

Step 4: the risks of staying in longer

Deferral to 85 is an option, not a recommendation. At the 6 per cent assumption, 25 years of deferral produce Rs 429.19 lakh rather than Rs 684.85 lakh, and a sustained market fall in the years just before exit can reduce the corpus. Annuity rates on the date you finally exit are unknown today. Subscribers with health concerns should also remember that the annuity portion pays only while the annuity contract runs, so the choice of annuity type matters as much as the exit age. For background on how the account follows you through life, see our earlier piece on NPS PRAN portability across jobs, and for the full set of December 2025 exit changes see the NPS exits and withdrawals amendment explained.

FAQ

What is the maximum age to stay invested in NPS now?

The maximum exit age is 85 years under the PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025, announced on 19 December 2025. Before the amendment, the account had to close by 75.

Do I need to apply to continue NPS after turning 60?

No. Item 21 of the amendment removed the 15-day prior intimation requirement across all sectors. From 19 December 2025, your account continues automatically unless you start the exit process yourself.

Can I join NPS at 72?

Yes. The maximum entry age is now 85 years. Before the amendment, the joining ceiling was 70. Item 9 also removed the earlier 3-year vesting period for those joining after 60 under the All Citizen Model.

Is the lump sum tax-free if I take 80 per cent instead of 60?

Not necessarily. Section 10(12A) of the Income-tax Act exempts the lump sum only up to 60% of the total amount payable, even though PFRDA now allows a non-government subscriber to withdraw up to 80 per cent. Confirm the treatment of the 60 to 80 per cent slice with a tax adviser before withdrawing it.

Can I withdraw money from NPS while deferring my exit?

Yes. After 60 you can make partial withdrawals of up to 25 per cent of your own contributions with a minimum gap of 3 years and no cap on the number. These are exempt under Section 10(12B).

Does the 80/20 split apply to government employees?

No. The government sector remains at 60 per cent lump sum and 40 per cent annuity (item 14 of the PFRDA table), and NPS-Lite also stays at 60/40. The 80/20 split applies to the All Citizen Model and Corporate Sector.

This article is for information only and is not investment or tax advice. Rules are taken from the PFRDA amendment published on pfrda.org.in; tax treatment from the Income-tax Act, 1961. Return figures in the worked example are assumptions, not projections.