NPS at 60: the new 80% lump sum, worked out
From December 2025, you can take up to 80% of your NPS money in one go when you exit. Earlier the limit was 60%. Here is what the new rules say, and what they mean in rupees.
Example: ₹5,000 a month from age 30 to 60, growing at an assumed 10% a year
Take 60%: ₹68.38 lakh in hand, all tax-free, plus ₹24,693 a month.
Take 80%: ₹91.17 lakh in hand, but ₹22.79 lakh of it is taxed, plus ₹12,346 a month.
What changed
The 80% rule is for people who are not government employees. That means anyone in NPS on their own (the "All Citizen" model) or through a private employer. Government employees have their own rules, explained below.
- You can take up to 80% at once. The rest, at least 20%, must buy an annuity. An annuity is a plan from an insurance company that pays you a fixed pension every month for life.
- Before, the limit was 60%. At least 40% had to go into an annuity.
- When you can exit. On your own: at 60, or after 15 years in NPS, whichever comes first. Through an employer: when you retire.
- Small amounts can be taken out in full. If your total is ₹8 lakh or less, you can take all of it.
- Leaving early is still limited. If you exit before the points above, you can take only 20% at once. The other 80% must buy an annuity, unless your total is ₹5 lakh or less.
- You can stay in longer. You can now keep your money in NPS until age 85.
What you can do, by how much you have
| Your NPS total | Your options |
|---|---|
| ₹8 lakh or less | Take it all at once. Or take it in instalments. Or take up to 80% and buy an annuity with the rest. |
| ₹8 lakh to ₹12 lakh | Take up to ₹6 lakh at once, and the rest in instalments over at least 6 years, or as an annuity. Or the 80/20 split. |
| More than ₹12 lakh | Take up to 80% at once. At least 20% buys an annuity. |
If you are a government employee
Central and state government employees in NPS have different rules. The 80% option is not for them.
| Your NPS total, at retirement | Your options |
|---|---|
| ₹8 lakh or less | Take it all at once, or in instalments. Or take up to 60% and buy an annuity with the rest. |
| ₹8 lakh to ₹12 lakh | Take up to ₹6 lakh at once, and the rest in instalments over at least 6 years. Or the 60/40 split. |
| More than ₹12 lakh | Take up to 60% at once. At least 40% buys an annuity. This has not changed. |
Leaving before retirement works the same as for everyone else: only 20% at once, unless the total is ₹5 lakh or less.
Because the limit is 60%, all of it is tax-free. In the example below, that is the 60% row.
Central government employees could also move from NPS to the Unified Pension Scheme (UPS), which pays an assured pension. The window to switch closed on 30 September 2025. UPS has its own rules and is not covered here.
One example, four choices
Say you put ₹5,000 a month into NPS from age 30 to 60. That is ₹18 lakh in total. If it grows at 10% a year, you have about ₹1.14 crore at 60.
Here is how that splits, if the annuity pays 6.5% a year:
| Lump sum | You get at once | Tax-free | Taxed | Pension a month |
|---|---|---|---|---|
| 0% | ₹0 | ₹0 | – | ₹61,732 |
| 60% | ₹68.38 lakh | ₹68.38 lakh | – | ₹24,693 |
| 70% | ₹79.78 lakh | ₹68.38 lakh | ₹11.4 lakh | ₹18,520 |
| 80% | ₹91.17 lakh | ₹68.38 lakh | ₹22.79 lakh | ₹12,346 |
The more you take at once, the smaller your monthly pension. Which is better depends on your other income, savings, health and plans. A calculator cannot decide that for you.
The catch: only 60% is tax-free
The tax law has not changed with the new rule. Only up to 60% of your NPS total is tax-free. This is in Schedule II of the Income-tax Act, 2025 (old Section 10(12A)).
So if you take 80%, the extra 20% is added to your income for that year. In our example, that is ₹22.79 lakh. If you are in the 30% tax slab, the tax with 4% cess is about ₹7.11 lakh, plus surcharge if it applies.
The pension is also taxed every year, like salary.
The pension does not grow
Most annuities pay the same amount every month for life. But prices go up every year.
At 6% inflation, ₹12,346 a month will buy only what about ₹3,850 buys today, 20 years later. (₹24,693 becomes about ₹7,699.)
Some annuities increase every year, but they start with a lower pension. Annuity rates also differ by insurer, age and plan. We used 6.5% only as an example.
How we worked out the numbers
- Your NPS total: each month, ₹5,000 is added. Then the whole amount grows by one month's return (10% ÷ 12). After 360 months, that is ₹1,13,96,627.
- Money you take at once: your total × the percentage you choose.
- Tax-free part: up to 60% of your total. Anything above that is taxed.
- Monthly pension: the amount left for the annuity × the annuity rate ÷ 12.
The 10% return is only an assumption. Real NPS returns depend on the market and the funds you choose. Past returns are not a guarantee. This page explains the rules and the maths. It does not tell you what to choose.
Common questions
Can I take out 80% of my NPS at 60?
Yes, if you are not a government employee and your total is more than ₹8 lakh. You can take up to 80% at once. At least 20% must buy an annuity. If you joined on your own, this also applies after 15 years in NPS, if that comes before 60.
Is the full 80% tax-free?
No. Only up to 60% of your total is tax-free. The extra 20% is taxed at your slab. On a ₹1.14 crore total, that is ₹22.79 lakh of taxable income.
What if my NPS total is less than ₹8 lakh?
You can take it all at once, take it in instalments, or take up to 80% and buy an annuity with the rest. Between ₹8 lakh and ₹12 lakh, you can take up to ₹6 lakh at once. The rest comes in instalments over at least 6 years, or as an annuity.