Can you take out money from your NPS before retirement?

I've been investing in NPS for several years. Can I make a partial withdrawal before retirement? What are the rules, and how do I go about it? - Anonymous

Yes, you can make a partial withdrawal from your NPS account before retirement, but only under certain conditions. This feature is designed to help you during critical times, not to meet everyday cash needs.

When can you withdraw?

Partial withdrawals are allowed only for specific cases, such as:

• Higher education or marriage of your children
  
• Purchase or construction of your first house (if you don't already own one)
  
• Medical treatment for listed critical illnesses (for self, spouse, children or dependent parents)
  
• Starting a new business or venture
  
• Skill development or vocational training approved by government bodies

Supporting documents are required for each case—for example, medical reports or an admission letter.

Who is eligible?

To make partial withdrawals before retirement, you must be an NPS subscriber for at least three years. You're allowed a maximum of three partial withdrawals during your NPS tenure. The maximum amount you can withdraw is 25 per cent of your own contributions (employer's share and investment returns don't count).

How to apply for a partial withdrawal?

There are two ways:

• Online: Log in to your NPS account → Go to 'Withdrawal Request' → Choose 'Partial Withdrawal' → Fill in the details and upload necessary documents → Submit.
• Offline: Fill out the partial withdrawal form and attach the required documents → Submit it to your point of presence (POP). A POP can be a bank or financial institution that helps open, manage and service your NPS account.

They'll forward your request to the CRA (central recordkeeping agency) for processing. Once approved, the amount is credited to your registered bank account.

Want to close your NPS account early?

That's allowed, but with tighter conditions. You can opt for premature closure of your NPS account only after you've completed at least 10 years (or five years where there's no employer contribution) as an NPS subscriber. In such cases:

• 80 per cent of the corpus must be used to buy an annuity
• The remaining 20 per cent can be withdrawn as a lumpsum

However, if your total NPS corpus is less than Rs 2.5 lakh, you can withdraw the entire amount without buying an annuity.

Also read: Can NPS employer contribution save tax this year?

This article was originally published on April 18, 2025.