Expert Tips for First-Time Investors to Navigate NPS Withdrawal

aryan mehra

June 13, 2025

Table of Content

The Pension Fund Regulatory and Development Authority (PFRDA) introduced the National Pension Scheme (NPS) to provide a framework that encourages individuals to save in varying ways until retirement. The government-mandated pension program aims to help subscribers save systematically during their employment. All citizens of India, including those in the organized sector, the unorganized sector, and those who are self-employed, can access the NPS.

National Pension Scheme: An Overview

The National Pension Scheme operates on a defined-contribution scheme. Subscribers make regular contributions, which financial institutions then invest in an array of investment choices, including equity, corporate bonds, government securities, and others, based on the choices made by the subscribers or by the default choice set by the system. Subscribers may withdraw a percentage of their accumulated assets upon reaching 60 years of age as a lump sum; the list continues with the other portion converting into annuities.

NPS has two types of accounts:

Tier I Account: This is the main retirement account where you restrict withdrawals.

Tier II Account: This account serves as a voluntary savings account without restrictions on withdrawals but does not provide any tax benefits under Section 80CCD.

How to Check NPS Balance?

Go to the CRA Portal: Visit the site of the Central Recordkeeping Agency or CRA, such as NSDL (https://cra-nsdl.com) or KFintech (https://nps.kfintech.com), depending on which agency manages that particular subscriber’s account.

Log on to NPS Account: Log in using your Permanent Retirement Account Number (PRAN) and password/OTP.

Go to the transaction statement: Once logged in, navigate to the ‘Transaction Statement’ or ‘Holding Statement’ section to check the current NPS balance, including contributions made, the current NAV of fund holdings, and the overall account value.

Use Mobile App or NPS Mobile Services: Subscribers can check their balance using the NPS mobile app on Android and iOS platforms or by SMS and email alerts, providing periodic information about their balance, subject to enrollment.

Check Through Employer Portal: For corporate or government employees, some employers may offer integrated NPS access through their payroll systems.

Withdrawals from the National Pension Scheme

The PFRDA regulates withdrawal regulations from the NPS. You can start withdrawals after retirement at the age of 60 and/or in special instances, such as premature exit or death.

Types of Withdrawals

Withdrawal at Retirement:

You can withdraw up to 60% of the corpus as a lump sum.

You must utilize a minimum of 40% for the purchase of an annuity.

Premature Exit:

After ten years of contributions.

You can withdraw 20% of the corpus; 80% must go towards the purchase of an annuity.

Partial Withdrawals:

You can only make partial withdrawals for specific conditions like higher education, marriage, home purchase, or critical illness.

You can withdraw up to 25% of your contribution (not including your employer’s contribution).

Withdrawal in the event of death:

You must pay the entire accumulated corpus to the nominee/legal heir per the last will, without any compulsory annuity.

Expert Tips for First-Time Investors on NPS Withdrawal

Understand Regulatory Guidelines: First-time investors must gain a clear understanding of NPS Withdrawal rules as outlined by PFRDA. This includes knowing the timelines, required documentation, and eligibility criteria — even for partial withdrawals — to ensure a smooth and compliant process.

Annuity Options: Carefully study the available annuity service providers with their plan comparison – payout options (lifetime, joint, return of purchase price) and terms—against your chosen annuity product.

Plan Tax Implications: Keep in mind that any amount you withdraw as a lump sum before reaching 60% would be exempt from taxation. Nonetheless, the annuity income is subject to tax depending upon your income tax slab, so keep that in mind while planning for withdrawals.

Start Timely: Begin the withdrawal process at least 6 months prior to retirement to ensure no unwarranted delays. Go on the CRA portal and use the online module for withdrawal.

Update Nominee Details: Ensure that your nominee details are accurate and updated to minimize hindrance while processing in the unfortunate event of your demise.

Get KYC Documents Ready: Collect and keep ready the latest KYC documents, i.e., PAN, Aadhaar, bank details, photographs, etc., required for processing.

Be Aware of Changes: Periodically check for updates from PFRDA or CRA to stay informed about changes in rules or regulations affecting withdrawal rules.

Consult Registered Financial Advisors: Seek advice from NPS points of presence or registered advisors concerning retirement income planning and annuity selection.

Conclusion

The National Pension Scheme provides respite for those building up their retirement savings through market-related instruments while being regulated. Keeping track of and being courteous to your account status, and being well aware of expert tips for first-time investors can guide NPS subscribers in the correct direction.

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