National Pension System (NPS) and Employees’ Provident Fund (EPF) remain the two most widely used retirement savings options for non-government employees in India, largely because they are government-backed and viewed as relatively low-risk. However, these schemes are frequently updated to improve flexibility and ease of access. According to reports several major rule changes have recently been introduced under both NPS and EPF, which could directly affect how much money subscribers can withdraw, how funds are invested, and how quickly claims are settled. Here’s what has changed and what it could mean for your retirement planning.
NPS: Bigger Withdrawals, More Flexibility
A key change to NPS exit rules is the reduction in the mandatory annuity purchase requirement. Earlier, NPS subscribers had to use 40% of their corpus to buy an annuity. This has now been lowered to 20%, allowing retirees to withdraw up to 80% of their total savings as a lump sum.
There is also relief for small corpus holders. If a subscriber’s NPS balance is Rs 8 lakh, the entire amount can now be withdrawn at once, without the need to purchase an annuity.
In terms of tenure, subscribers can now exit after completing 15 years in NPS, and those who wish to stay invested can continue up to the age of 85. Another important revision: partial withdrawals before the age of 60 are now allowed four times instead of three, while the minimum four-year gap between withdrawals remains.
Investment rules have also been liberalised. From October 2025, non-government NPS account holders can invest up to 100% of their deposits in equity, compared to the earlier cap of 75%.
EPF: Faster Claims, Simpler Withdrawals
Under EPFO 3.0, withdrawal reasons have been simplified from 13 separate categories into three broad heads: essential needs, housing-related needs, and special circumstances. The minimum required service period for withdrawals across categories has reportedly been reduced to 12 months.
Another long-standing pain point-employer approval-has largely been removed for EPF transfers and withdrawals, reducing delays especially when employees change jobs.
For claims up to Rs 5 lakh, settlement can now be processed automatically without manual verification. Security has been enhanced through facial authentication via the UMANG app. However, one change may affect liquidity: the waiting period for withdrawing the full EPF amount after leaving a job has been increased from two months to 12 months.
