One Account for Life: Why Your NPS PRAN Follows You Across Jobs, Cities and Sectors

When you change jobs in India, almost every retirement benefit you have built resets in some way. Your Employees' Provident Fund sits under a Universal Account Number that your new employer has to link; your gratuity clock, governed by Section 10(10) of the Income-tax Act with its Rs 20 lakh ceiling, starts again from zero on the day you join. The National Pension System works on the opposite principle. Per the Pension Fund Regulatory and Development Authority (PFRDA), the Permanent Retirement Account Number (PRAN) "remains unchanged even when the subscriber shifts employment, sector or location", so a single retirement account follows you from a private job to government service to self-employment without ever being reopened.

That one design choice is what this guide compares. We put the portable NPS PRAN side by side with the employer-tied EPF and gratuity, explain how each is taxed when you finally draw it down, and work through a Rs 1 crore corpus example using the exit rules as they stand after the PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025, notified on 19 December 2025. Every figure below is drawn from PFRDA's own rules and the Income-tax Act; where a number is illustrative, it is labelled so.

The Scheme Explained

The PRAN is a 12-digit number issued once, when you first enrol in NPS, and it is yours for life. PFRDA's All Citizen Model FAQ confirms that "NPS account can be transferred across employment, location/geography", which is the structural difference from EPF: with provident fund you carry a Universal Account Number but the underlying account is opened afresh by each establishment and must be transferred in, while with NPS the account itself never changes hands. Under the 2025 amendment the maximum entry age and maximum exit age both stand at 85, so the single account can legitimately stay open for decades after a career ends.

NPS runs on two tiers. Tier I is the default pension account that carries the tax incentives under the Income-tax Act, 1961, and its withdrawals are locked to the exit rules. Tier II is an optional, no-lock-in account that requires an active Tier I and carries no tax benefit; PFRDA states plainly that Tier II "is not a Pension Account", and money can be moved from Tier II into Tier I only as a one-way switch. For the retirement comparison that matters here, Tier I is the account that behaves like a pension.

The contrast with employer-tied benefits is sharpest when you move jobs. The table below sets out the three main retirement pots an Indian salaried worker accumulates.

The practical consequence is that a worker who changes employers four or five times keeps one unbroken NPS record, while the same worker may surrender gratuity entitlement each time they leave before completing five years. EPF sits in between: the balance is portable through the UAN, but it depends on each new employer correctly linking and transferring it, and the 8.25% rate declared by the Employees' Provident Fund Organisation for FY 2025-26 is reviewed annually rather than market-linked.

Tax on Withdrawal

The headline exit number changed on 19 December 2025, and the tax rule did not move with it. PFRDA raised the lump-sum ceiling for the non-government sector (the All Citizen and Corporate models) to 80% of the corpus, leaving a minimum of 20% to be annuitised. The Income-tax Act was not amended in step. Section 10(12A) still exempts the payment received on closure or opting out of NPS only "to the extent it does not exceed sixty per cent of the total amount payable", a limit in force since 1 April 2020. So a non-government subscriber may now withdraw up to 80% as a lump sum while the statutory exemption still covers only 60%; the slice between 60% and 80% is not covered by that specific exemption, and you should confirm its treatment for your own case before drawing it, because no matching Finance Act change has been enacted to call it tax-free.

The annuitised portion is taxed differently again. The money used to buy the annuity is not taxed at the point of purchase, but the pension it pays out afterwards is taxable in each year of receipt at your slab rate. Under the new-regime slabs for FY 2025-26, income up to Rs 4 lakh is nil-rated and the Section 87A rebate now runs up to Rs 60,000 for total income up to Rs 12 lakh, so a retiree whose only income is a modest annuity may pay little or no tax; a retiree stacking an annuity on top of other income is taxed at the marginal slab, which reaches 30% above Rs 24 lakh. Partial withdrawals during the accumulation phase are the most favourable: Section 10(12B) exempts up to 25% of the subscriber's own contributions, and that 25% matches the PFRDA partial-withdrawal limit exactly, so a correctly sized partial withdrawal is fully exempt.

It is worth noting how this compares with simply investing in equity mutual funds for retirement. Those are taxed on redemption as capital gains: long-term gains on listed equity are taxed at 12.5% beyond the Rs 1.25 lakh annual exemption, following Budget 2024. NPS trades that flexible-but-taxed treatment for a structured exit in which the majority is exempt but a fifth must become a pension. Two deductions shape the build-up phase and are easy to get wrong: employer contributions remain deductible under Section 80CCD(2) in both the old and the new tax regime, but the additional voluntary deduction under Section 80CCD(1B) is available only under the old regime and cannot be claimed in the new regime.

Choosing When to Exit: 60, 75 or 85

The 2025 amendment widened the timing choices rather than forcing a single exit date. A non-government subscriber reaching 60 is not obliged to annuitise immediately: PFRDA allows the lump sum to be deferred or drawn in instalments, and the annuity purchase to be deferred, with the account able to stay open to age 75 and, under the raised ceiling, up to 85. A subscriber who exits prematurely before 60 faces the stricter split, a maximum 20% lump sum and a minimum 80% annuity, although the amendment removed the earlier five-year minimum lock-in for premature exit. Small corpuses are treated leniently at both doors: on a normal exit a non-government corpus at or below Rs 8 lakh may be taken entirely as a lump sum, and on a premature exit the full-withdrawal threshold is Rs 5 lakh.

The sector you exit from governs which row applies, which is exactly why the portability point matters at the end as well as the start: an All Citizen subscriber who spent years in government service exits under the rules of the model their account sits in at the time of exit, not the model they contributed under years earlier.

Worked Drawdown

Consider a subscriber who opens a PRAN at 30 and keeps the same account through three distinct phases of working life. The figures below are illustrative; the growth is pegged to 8.25%, the FY 2025-26 EPF rate, purely to show the mechanics, and NPS returns are market-linked and will differ.

Across all three phases there is one account, one PRAN and one unbroken return history; nothing is surrendered or reopened on the two job changes. Suppose the account reaches a corpus of Rs 1 crore at age 60, with the subscriber exiting under the non-government All Citizen model. Applying the post-2025 rules, the maximum lump sum is 80% of Rs 1 crore, which is Rs 80 lakh, and the minimum annuity is 20%, which is Rs 20 lakh.

The tax split follows the two separate limits. Of the Rs 1 crore, 60%, or Rs 60 lakh, is exempt under Section 10(12A). The next 20%, the Rs 20 lakh between the 60% exemption line and the 80% withdrawal line, is permitted by PFRDA but not covered by that exemption, so its treatment must be confirmed before withdrawal rather than assumed to be tax-free. The remaining Rs 20 lakh buys an annuity; that purchase is not taxed, but the monthly pension it generates is added to income each year and taxed at slab. The exact pension depends entirely on the annuity variant chosen, which is why you should model it against your own quotes rather than a headline rate.

Contrast two smaller corpuses at the same age-60 door, both under the non-government rules. A subscriber with a Rs 7 lakh corpus is below the Rs 8 lakh full-withdrawal threshold and may take the entire Rs 7 lakh as a lump sum, with no compulsory annuity. A subscriber with a Rs 12 lakh corpus falls in the mid-band above Rs 8 lakh, where the lump sum is capped at Rs 6 lakh and the balance is handled through the systematic or annuity route. The lesson of the drawdown is that the 80% headline is a ceiling for larger corpuses, while the real planning decisions sit at the Rs 8 lakh and Rs 12 lakh thresholds and in the 60%-versus-80% tax gap.

To test your own numbers, use the NPS calculator to project the corpus, the retirement drawdown calculator to sequence withdrawals across the years to 75 or 85, and the annuity-versus-SWP calculator to compare the compulsory 20% annuity against drawing the lump sum down yourself. If you are weighing the employer-tied side of the comparison, the gratuity calculator applies the Rs 20 lakh Section 10(10) ceiling. For definitions, see the glossary entries on NPS, annuity and corpus.

FAQ

Does my PRAN change when I switch from a private job to a government job?

No. Per PFRDA, the PRAN remains unchanged when a subscriber shifts employment, sector or location, so the same 12-digit account continues from a private-sector role into government service. What changes is the model your account is tagged under, and therefore the exit split that will apply, not the account number itself.

How much of my NPS corpus can I take as a lump sum at 60?

Since the 19 December 2025 amendment, a non-government subscriber can take up to 80% of the corpus as a lump sum, leaving at least 20% for an annuity. Government-sector subscribers remain at 60% lump sum and 40% annuity, and NPS-Lite is also 60% and 40%.

Is the 80% lump sum fully tax-free, or only the 60% covered by Section 10(12A)?

No, and this is the most common error. Section 10(12A) of the Income-tax Act exempts the lump sum only up to 60% of the corpus, a limit unchanged since 1 April 2020. The 60%-to-80% slice that PFRDA now permits is not covered by that exemption, so you should confirm its tax treatment for your situation before withdrawing rather than assume it is exempt.

Can I claim the extra 80CCD(1B) deduction in the new tax regime?

No. The additional deduction under Section 80CCD(1B) is available only under the old tax regime and cannot be claimed in the new regime. The employer-contribution deduction under Section 80CCD(2) is different and is retained in both regimes.

Are partial withdrawals before retirement taxed?

A partial withdrawal is capped at 25% of your own contributions and is exempt under Section 10(12B), with that 25% matching the PFRDA limit exactly. You must have been in the scheme for at least three years, and before age 60 you may make such withdrawals up to four times.

Can I keep contributing after 60?

Yes. Under the 2025 amendment the maximum exit age is 85, and subscribers may continue, defer the lump sum, draw it in instalments or defer the annuity purchase up to 75, keeping the single PRAN active well past the conventional retirement age.

How does NPS portability compare with EPF and gratuity?

NPS keeps one PRAN across every job. EPF is portable through the UAN but the balance is transferred establishment to establishment and the 8.25% FY 2025-26 rate is set annually. Gratuity is employer-tied, exempt only up to Rs 20 lakh under Section 10(10), and eligibility restarts when you change jobs before completing five years.