NPS account closure: PFRDA issues guidelines for these pension accountholders; check details

The Pension Fund Regulatory and Development Authority (PFRDA) has outlined specific rules for the closure of National Pension System (NPS) accounts for subscribers who have renounced Indian citizenship. According to a circular issued on 21 April 2025, affected subscribers who do not hold an Overseas Citizen of India (OCI) card must immediately notify the NPS Trust about their change in citizenship status. This move requires subscribers to provide proof of renunciation, after which their Permanent Retirement Account Number (PRAN) or NPS account will be closed. Subsequently, the entire accumulated pension wealth will be transferred exclusively to the subscriber’s Non-Resident Ordinary (NRO) account. 

The PFRDA circular, which was issued on April 21, 2025, stated: “In respect of such subscribers who have validly renounced their Indian citizenship and do not hold an OCI card, the said subscriber is required to forthwith intimate National Pension System Trust (NPS Trust) of the change in status along-with proof thereof and PRAN/NPS account held by the subscriber shall be closed and the entire accumulated pension wealth may be transferred to Non-Resident Ordinary (NRO) account only.”

The PFRDA has clarified the steps necessary for subscribers to complete this account closure process. Subscribers must submit an application for account closure, accompanied by a signed declaration confirming their renunciation of Indian citizenship and the absence of an OCI card.

Essential documentation such as a certificate of renunciation, a surrender certificate, or a cancelled Indian passport issued by a competent authority must also be provided.

Once these documents are verified, the NPS Trust and Central Recordkeeping Agencies (CRAs) will facilitate the closure of the account and transfer the funds to the designated NRO account in compliance with the Foreign Exchange Management Act (FEMA) guidelines. 

Renouncing Indian citizenship

Renouncing Indian citizenship is a formal legal procedure under Indian law, usually pursued when an individual acquires citizenship of another country, as India does not permit dual citizenship. This legal framework is critical for governing the status of NPS accounts, which can be opened by Indian citizens, Non-Resident Indians (NRIs), and OCIs. However, specific conditions stipulated by the PFRDA must be met. In cases where citizenship changes, the NPS account must be managed in accordance with the new regulatory provisions to ensure compliance with Indian financial and legal standards. 

The PFRDA's updated guidelines come as a necessary regulatory measure to address situations where former Indian citizens, who have opted for citizenship elsewhere, need to formalise their financial holdings in India. This procedure ensures that pension wealth accumulated during their tenure as Indian citizens is appropriately managed and transferred in line with international financial regulations. It also clarifies the status of such accounts for subscribers, ensuring their pension wealth is not left in limbo due to changes in citizenship. 

These regulatory changes reflect the PFRDA's commitment to maintaining a transparent and compliant financial environment for NPS subscribers. By providing clear guidelines and a structured approach for account closure and fund transfer, the PFRDA helps ensure that subscribers' financial interests are safeguarded even when their citizenship status undergoes significant changes.