If an NPS Subscriber Goes Missing: New Regulation 5B and the 20% Interim Relief for Nominees
PFRDA's new NPS Regulation 5B lets nominees of a missing subscriber claim 20% of the pension wealth as interim relief on an FIR and police report; 80% waits for a court order.
Key points
- PFRDA inserted Regulation 5B into the NPS exit regulations through an amendment dated 12 December 2025, creating an exit route for subscribers who go missing.
- Nominees or legal heirs can claim 20% of the accumulated pension wealth as interim relief on an FIR copy, a police non-traceable report and an indemnity bond.
- The remaining 80% stays invested until a court declares the subscriber presumed dead, and is netted off the subscriber's lump sum if they return alive.
When a family member disappears, the paperwork usually stalls long before the grief does. Until December 2025, the National Pension System (NPS) had no specific route for that situation: the accumulated pension wealth sat in the account, and the nominee could only claim it as a death claim once death was established. The PFRDA (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025, dated 12 December 2025 and published in Gazette of India Extraordinary No. 808 (Part III, Section 4), changed that by inserting a new Regulation 5B: Exit in case of missing and presumed dead person.
The core rule is short. The nominee(s) or legal heir(s) of a subscriber identified as missing can be paid 20% of the accumulated pension wealth as interim relief, in lump sum. The other 80% stays invested and is released only once a competent court declares the subscriber presumed dead under the Bharatiya Sakshya Adhiniyam, 2023.
The Scheme Explained
Where Regulation 5B sits in the 2025 amendment
The same notification rewrote Regulations 3 and 4 and inserted Regulations 4A and 5A; PFRDA summarised the changes in its press release of 19 December 2025. The amended definition of exit in Regulation 2 now lists, as a separate ground, "closure of individual pension account, upon death of the subscriber or in case of subscriber being missing and presumed dead under the provisions of the Bharatiya Sakshya Adhiniyam, 2023".
Regulation 5B(1) applies to subscribers "covered under regulations 3, 4, 4A and 5". In plain terms, that is four groups:
| Regulation | Who it covers | Normal exit split on retirement or maturity (above the small-corpus thresholds) |
|---|---|---|
| 3 | Government sector subscribers | Up to 60% lump sum, at least 40% annuity |
| 4 | Non-government sector (All Citizen Model and Corporate Sector) | Up to 80% lump sum, at least 20% annuity |
| 4A | Specific purpose schemes under NPS | As per PFRDA guidelines for each scheme |
| 5 | NPS-Lite and Swavalamban | Up to 60% lump sum, at least 40% annuity |
Source: PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025, Regulations 3, 4, 4A and 5, and Schedule I.
The 20% interim relief under Regulation 5B is the same percentage for all four groups. It does not depend on the subscriber's sector, age or account size.
Clause (a): the 20% interim relief
Regulation 5B(1)(a) says the nominee(s) or legal heir(s) "of the subscriber identified as missing, shall be entitled to be paid twenty percent of the accumulated pension wealth as an interim relief in lump sum and the balance eighty percent shall remain invested". Three points matter:
- "Identified as missing" is a defined step. The Explanation to Regulation 5B says that for a government sector subscriber, identification as missing "shall be on the basis of certification provided by the nodal office or employer"; for a non-government sector subscriber, it is by the National Pension System Trust (NPS Trust).
- Nominee first, legal heir otherwise. The words "as the case may be" mirror the death-claim rule in Regulation 4(1)(c), where, if no nomination was registered, payment goes to legal heirs on a legal heir certificate or succession certificate. A registered nomination is therefore the fastest route to the 20%.
- The 80% is not frozen in cash. The text says it "shall remain invested", so it keeps its market exposure under the subscriber's existing scheme choice until the court stage.
Clause (b): documents for the interim relief
Regulation 5B(1)(b) lists what the nominee or legal heir must submit to the NPS Trust:
| Document | What the regulation requires |
|---|---|
| FIR copy | A copy of the First Information Report "lodged with the concerned police station" (the Gazette text reads "First Investigation Report") |
| Police non-traceable report | A report from the police "that the subscriber has not been traced despite all efforts made by the police" |
| Indemnity bond | In favour of the NPS Trust, stating that neither the Trust, "nor any other entity or the Authority shall be liable" to the subscriber or anyone else for the interim relief paid |
Source: Regulation 5B(1)(b), Gazette of India Extraordinary No. 808, December 2025.
The indemnity bond is the detail most families will not expect. Under Regulation 5B(1)(b), it means the person receiving the 20% accepts the risk if, for example, another claimant later disputes the payment.
Clause (c): the balance 80% after a court declaration
Under Regulation 5B(1)(c), once the nominee or legal heir submits "an order from a competent court declaring that the subscriber who is missing is presumed to be dead in accordance with the provisions of the Bharatiya Sakshya Adhiniyam, 2023", the balance 80% is dealt with under the ordinary death-claim rule for that subscriber's category:
| Subscriber category | Death rule applied to the 80% balance | What that rule says |
|---|---|---|
| Government sector | Regulation 3(1)(c) | At least 80% to default annuity, balance as lump sum or periodic payouts; full lump sum allowed if wealth does not exceed Rs 8 lakh; up to Rs 6 lakh lump sum if above Rs 8 lakh and not above Rs 12 lakh |
| Non-government sector | Regulation 4(1)(c) | Entire accumulated pension wealth paid in lump sum to nominee(s) or legal heir(s), with an option of systematic lump sum withdrawal (SLW), systematic unit redemption (SUR) or annuity |
| NPS-Lite / Swavalamban | Regulation 5(1)(c) | Schedule I, Table 3: up to 100% lump sum or up to 100% annuity on death |
| Specific purpose schemes | PFRDA guidelines for the scheme | As notified per scheme |
The gap between the government and non-government columns is large. A non-government nominee can take 100% of the balance as cash; a government-sector nominee above Rs 12 lakh will see at least 80% converted to an annuity.
The proviso: if the subscriber comes back
The proviso to Regulation 5B(1)(c) covers the outcome every family hopes for. If the subscriber "is subsequently reported to be alive before a declaration being made by the competent court of his being dead", the individual pension account "shall continue for all purposes", and the 20% already paid "shall be adjusted from the lump sum withdrawal payment to be made to the subscriber at the time of his exit".
Why this matters for retirement planning
Before the December 2025 amendment, the 2015 exit regulations had no interim route for a missing subscriber; a nominee had to wait for death to be established. The practical effect of Regulation 5B is that a household which depended on the subscriber's income can access a defined share of the NPS corpus on police documents alone, without waiting for the court declaration. You can model how large that 20% would be on your own account using the NPS calculator.
Tax on Withdrawal
What the Income-tax Act provisions cover
The tax rules for NPS payouts sit in the Income-tax Act, not in the PFRDA regulations, and PFRDA has no power to amend them. Two exemptions are relevant, both confirmed in the reference data Oquilia maintains for this desk (last updated 19 December 2025):
| Provision | What it exempts | Limit |
|---|---|---|
| Section 10(12A) | Payment from the NPS Trust on closure of the account or on opting out | Up to 60% of the total amount payable (since 1 April 2020) |
| Section 10(12B) | Partial withdrawal by the subscriber | Up to 25% of the subscriber's own contributions |
Source: incometax.gov.in and Oquilia rate configuration, npsExit.
What the regulations do not say
Regulation 5B is silent on tax. Neither the Gazette notification nor PFRDA's press release of 19 December 2025 says how the 20% interim relief is to be treated in the hands of a nominee or legal heir. That leaves three open questions:
- Is the interim relief "closure" or "opting out"? Section 10(12A) speaks of a payment "on closure of his account" or "on his opting out". Under Regulation 5B, the account is not closed when the 20% is paid; the 80% "shall remain invested". Whether 10(12A) reaches this payment is not answered by the text we have verified.
- Whose income is it? The relief is paid to the nominee or legal heir while the subscriber is, legally, still alive. If the subscriber returns, the 20% is adjusted against the subscriber's own future lump sum under the proviso to 5B(1)(c).
- The 60/80 mismatch. Since 19 December 2025, non-government subscribers may take up to 80% as lump sum on normal exit, but Section 10(12A) still exempts only 60%, and no Finance Act change aligning the two has been found.
Until CBDT or a Finance Act addresses Regulation 5B, confirm the treatment of any payout with a chartered accountant before filing your return for the year of receipt; do not assume any part of it is wholly tax-free under Section 10(12A).
Worked Drawdown
The three examples below use illustrative balances held flat, with no investment return, so the arithmetic of Regulation 5B stays visible; in reality the 80% that "shall remain invested" will move with markets. None assumes a tax outcome.
Example 1: Non-government subscriber, Rs 50 lakh
A 48-year-old All Citizen Model subscriber with Rs 50 lakh of accumulated pension wealth is reported missing.
| Stage | Trigger | Amount | Basis |
|---|---|---|---|
| Interim relief | NPS Trust identifies subscriber as missing; FIR, police report and indemnity bond submitted | Rs 10,00,000 lump sum | 20% of Rs 50 lakh, Regulation 5B(1)(a) |
| Remains invested | Until court order | Rs 40,00,000 | 80% balance, Regulation 5B(1)(a) |
| Final settlement | Court declares subscriber presumed dead under BSA 2023 | Rs 40,00,000 as lump sum, or SLW / SUR / annuity at nominee's option | Regulation 4(1)(c) via 5B(1)(c) |
If the nominee spreads the Rs 40 lakh by systematic lump sum withdrawal over five years, the flat-value arithmetic is Rs 8 lakh a year; over eight years, Rs 5 lakh a year. You can test different drawdown periods, with your own return assumption, in the retirement drawdown calculator, and compare a systematic withdrawal path with an annuity in the annuity vs SWP calculator.
Example 2: Government sector subscriber, Rs 50 lakh
The same Rs 50 lakh, but the subscriber is a central government employee, so the nodal office or employer certifies the missing status.
| Stage | Amount | Basis |
|---|---|---|
| Interim relief | Rs 10,00,000 lump sum | 20%, Regulation 5B(1)(a) |
| Remains invested | Rs 40,00,000 | 80% balance |
| Final settlement, if Regulation 3(1)(c) is applied to the Rs 40 lakh balance | At least Rs 32,00,000 to default annuity; up to Rs 8,00,000 lump sum or periodic payouts | At least 80% annuity under Regulation 3(1)(c) |
Regulation 5B(1)(c) says the balance "shall be dealt with in accordance with" Regulation 3(1)(c), but it does not spell out whether the Rs 8 lakh and Rs 12 lakh thresholds in 3(1)(c) are tested against the 80% balance or against the whole original wealth. The row above shows the arithmetic only if the 80% annuity rule is applied to the balance. Families should ask the nodal office and the NPS Trust to confirm how the claim will be computed. The pension calculator can help estimate what a Rs 32 lakh annuity purchase might yield at a quoted annuity rate.
Example 3: Small account, Rs 6 lakh, and the subscriber returns
A non-government subscriber with Rs 6 lakh is reported missing. The nominee receives Rs 1,20,000 (20% of Rs 6 lakh) as interim relief, and Rs 4,80,000 stays invested.
Two years later, before any court declaration, the subscriber is traced alive. Under the proviso to Regulation 5B(1)(c), the account "shall continue for all purposes". Suppose that at age 60 the account has grown to Rs 20 lakh and the subscriber exits under Regulation 4(1)(a).
| Line | Amount | Basis |
|---|---|---|
| Accumulated pension wealth at exit | Rs 20,00,000 | Illustrative |
| Maximum lump sum (80%) | Rs 16,00,000 | Regulation 4(1)(a), wealth above Rs 12 lakh |
| Less interim relief already paid to nominee | Rs 1,20,000 | Proviso to Regulation 5B(1)(c) |
| Lump sum payable to subscriber | Rs 14,80,000 | Rs 16,00,000 less Rs 1,20,000 |
| Minimum annuity (20%) | Rs 4,00,000 | Regulation 4(1)(a) |
The interim relief comes out of the subscriber's lump sum, not out of the annuity portion.
FAQ
What is Regulation 5B of the NPS exit regulations?
Regulation 5B, inserted by the PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025 dated 12 December 2025, sets out the exit route when a subscriber is missing and presumed dead. It allows the nominee or legal heir 20% of the accumulated pension wealth as interim relief and keeps 80% invested until a court declaration.
Who can claim the 20% interim relief?
The nominee(s) registered on the account, or the legal heir(s) where there is no nomination. It applies to subscribers covered by Regulations 3, 4, 4A and 5, which together cover government sector, non-government sector, specific purpose schemes and NPS-Lite or Swavalamban subscribers.
What documents are needed for the interim relief?
Three, under Regulation 5B(1)(b): a copy of the FIR lodged with the police station, a police report that the subscriber has not been traced despite all efforts, and an indemnity bond in favour of the NPS Trust releasing the Trust, PFRDA and other entities from liability for the payment.
When is the remaining 80% paid?
Only after a competent court declares the subscriber presumed dead under the Bharatiya Sakshya Adhiniyam, 2023. The balance is then paid under the normal death rules: Regulation 3(1)(c) for government sector, 4(1)(c) for non-government sector and 5(1)(c) for NPS-Lite and Swavalamban.
What happens if the missing subscriber is found alive?
If the subscriber is reported alive before any court declaration, the account continues for all purposes. The 20% already paid to the nominee is adjusted from the lump sum withdrawal the subscriber receives at exit, under the proviso to Regulation 5B(1)(c).
Is the 20% interim relief tax-free?
Not confirmed. Section 10(12A) exempts up to 60% of the amount paid on closure of an NPS account or opting out, but Regulation 5B does not close the account when the interim relief is paid, and neither PFRDA's notification nor its 19 December 2025 press release addresses tax. Confirm the treatment with a tax adviser before filing.
Primary source: PFRDA (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2025, Gazette of India Extraordinary No. 808. Tax provisions: Income Tax Department. This article explains the regulation and is not tax or legal advice.