PFRDA Lets NRIs Keep NPS Tier I, Bars Tier II as Equity Cap Reaches 75%

Q: How does the April 2025 circular impact the retirement corpus of Indians who completely renounce their citizenship?

It triggers a mandatory exit from NPS for Indians who fully renounce citizenship and do not hold OCI status: the account is closed and the accumulated retirement corpus is settled, rather than being allowed to remain invested in NPS. In practical terms, this means the subscriber loses the option available to NRIs or OCIs to keep the Tier I account running after moving abroad. Once Indian citizenship is given up without OCI protection, the April 2025 PFRDA circular requires closure of the NPS account and payout of the accumulated pension wealth under the applicable exit rules. The impact on the corpus is therefore administrative and structural, not a separate penalty or “exit tax.” The retirement money does not disappear, but it can no longer stay inside NPS to continue compounding under the subscriber’s chosen pension fund and asset allocation. Settlement is triggered because the person no longer meets the citizenship-linked eligibility conditions for continuing in NPS. By contrast, Indians who only become non-resident, or who renounce citizenship but obtain or hold an OCI card, are treated differently. They can generally continue a Tier I NPS account subject to non-resident compliance requirements such as maintaining the required NRE or NRO bank account.

2 articles · Updated · Mint · Sep 7

NRIs and OCIs can continue or open NPS Tier I accounts after moving abroad, so an overseas move alone does not force withdrawal of the pension corpus.
PFRDA said those subscribers must comply with non-resident rules, including providing an NRE or NRO bank account, while contributions can continue through existing NPS channels.
Tier II remains off-limits for both NRIs and OCIs, a restriction the regulator says also applied in its 2019 circular allowing OCI enrolment.
NPS investments still offer Active or Auto Choice across equity, corporate bonds and government securities, with equity allocation allowed up to 75% under common schemes.
A different rule applies if a subscriber gives up Indian citizenship without obtaining OCI status: PFRDA's April 2025 circular requires account closure and settlement of the accumulated corpus.