NPS annuity is the mandatory use of at least 40% of your NPS corpus at exit (age 60 or 50 with 25 years) to purchase an annuity—a product that pays you a regular pension for life.

Annuity Types

• Life annuity — Pension for your lifetime
• Joint life annuity — Continues to spouse after your death
• Annuity with return of purchase price — Lump sum to nominee on death
• Annuity increasing by 3% — Helps offset inflation

For FIRE

The annuity mandate reduces flexibility: you cannot fully withdraw and manage the corpus yourself. For early retirement before 60, NPS is less suitable than PPF or mutual funds for the pre-60 years. The 40% annuity can still provide a stable income floor in later retirement.