Several major changes are set to take place in the NPS from October 1, 2025. Non-government subscribers will now have the option to invest 100% in equity, multiple schemes can be selected on a single PRAN under the Multiple Scheme Framework (MSF), and lump sum withdrawals of up to 80% will be possible after retirement.
NPS (National Pension System) is a well-known option for those investing for retirement. However, over time, its rules have undergone several improvements. Now, some major changes have been made to this scheme, which will not only make it more flexible but also provide investors with more options. Learn about all the major changes coming to this scheme here.
1. 100% equity investment exemption
Previously, non-government subscribers were only allowed to invest a certain portion of their NPS funds in equities. However, pension fund regulator PFRDA has proposed that the entire corpus (100%) be invested in equity options. This means that risk-averse investors can invest the entire corpus in the stock market, hoping for better returns over the long term. However, it will be entirely up to investors whether they want to invest 100% of their funds in the market.
2. Multiple Scheme Framework (MSF)
Until now, NPS subscribers could only run one scheme under a single PRAN (Permanent Retirement Account Number). Now, different schemes can be selected under a single PRAN (Permanent Retirement Account Number). This means that you can invest in different schemes (with different risk and return profiles). Under this, pension fund managers will now be able to introduce new customized schemes based on investor profiles, age, gender, or profession. The advantage of this is that investors will be able to choose from low, medium, and high-risk options based on their convenience and risk tolerance.
3. Relief in Lump Sum Withdrawal
Until now, only 60 percent of your NPS funds could be withdrawn in a lump sum after retirement, with 40 percent required to be invested in annuity. But this will no longer be the case. Now, you will be able to withdraw 80 percent of your funds in a lump sum, while 20 percent can be invested in annuity. There will be no change in the tax rules regarding withdrawals. Until now, once investors invested, they had the option to exit only after retirement. However, now they can opt out even after 15 years. Similarly, like EPF, NPS beneficiaries will now be able to withdraw funds early under certain circumstances, including education, marriage, and medical emergencies.
