NPS Rule Changes From October 1: Key Updates Investors Must Know— Details Here

New Delhi: Planning for retirement is no longer just about saving money but it’s about choosing the right investment that grows with you. One such option is the National Pension System (NPS), which opened up for the non-government sector in 2009. Over the past 16 years, it has steadily evolved into one of the most trusted retirement investment choices. With government-backed reforms, NPS has been shaped into a market-linked, flexible, and tax-friendly plan, making it a practical way for millions to secure their financial future.

Big Shifts in NPS Over the Years

In the past decade, the National Pension System (NPS) has seen significant changes—ranging from greater market exposure to revised tax benefits and updated withdrawal rules. Among the most recent updates is the launch of the Unified Pension Scheme (UPS), which has been introduced exclusively for central government employees, with the exception of those serving in the Indian armed forces. (Also Read: ITR Refund 2025: How Long It Takes, Tracking Status, And Common Delays Explained)

What’s Next for NPS? Upcoming Changes You Should Know

The National Pension System (NPS) is set to undergo another round of major updates, starting October 1, 2025. Among the key changes are the option to invest up to 100% in equities and the launch of a new Multiple Scheme Framework (MSF). In addition, the Pension Fund Regulatory and Development Authority (PFRDA) has rolled out draft proposals aimed at making withdrawal and exit rules much simpler for subscribers.

Key Upcoming Changes in NPS You Should Know

Here are some of the major updates coming to the National Pension System (NPS) in the months ahead:

100% Equity Investment Option (From October 1, 2025)

– Non-government sector subscribers will soon be able to invest up to 100% of their funds in equities under the new Multiple Scheme Framework (MSF).

– This offers higher return potential for those comfortable with stock market exposure, but also comes with higher risk due to market volatility.

Introduction of Multiple Scheme Framework (MSF)

– Until now, only one scheme could be operated under a single PRAN (Permanent Retirement Account Number).

– With MSF, investors can manage multiple schemes from different Central Record Keeping Agencies (CRAs) under one PRAN, giving them more flexibility and choice.

Simplified Exit and Withdrawal Rules

– PFRDA has proposed changes to make exiting and withdrawing from NPS more flexible.

– Exit after 15 years: Non-government subscribers may be allowed to exit after 15 years instead of waiting until retirement.

Higher lump sum withdrawals & easier partial exits: Investors may get more freedom to withdraw funds for needs like education, medical expenses, or building a home.

Major NPS Updates in the Past Year

Over the last year, the National Pension System (NPS) has gone through several important changes. One of the biggest was the launch of the Unified Pension Scheme (UPS)—introduced only for central government employees (excluding the armed forces), many of whom had been pushing for the return of the Old Pension Scheme (OPS).

However, the response to UPS has been lukewarm so far. To address this, the government has allowed a one-time switch option, giving employees the choice to return to NPS if they are not satisfied with UPS. (Also Read: Nifty Falls 3% In 7 Sessions As FIIs Pull Out Rs 30,141 Crore In September Amid Tariffs, Visa Fee Hike And Rupee Slide)

Alongside this, other changes are aimed at making NPS more attractive for investors. The upcoming 100% equity investment option could appeal to younger subscribers looking for higher returns, while simplified withdrawal and exit rules promise more flexibility and better liquidity for those needing access to their funds.

Tax Rules You Should Keep in Mind

Even with the new, more flexible withdrawal options, taxation still applies. Out of the 80 per cent lump sum withdrawal limit, only 60 per cent is exempt from tax, while the remaining 20 per cent will be taxed according to your income slab.