PFRDA Introduces New NPS Withdrawal Options Post-Retirement Amid Regulatory Changes

Pension Fund Regulatory and Development Authority Launches Retirement Income Scheme and Drawdown Options

The Pension Fund Regulatory and Development Authority (PFRDA) has introduced the Retirement Income Scheme (RIS) and drawdown options under the National Pension System (NPS), aiming to provide subscribers with greater flexibility in receiving periodic payout options post-retirement. According to a circular issued on May 15, 2026, the RIS allows subscribers to select a phased withdrawal of their designated pension corpus through any drawdown option.

The pension regulator emphasizes that these withdrawals will not impact the mandatory annuitization requirement of 20 percent or 40 percent of the corpus, ensuring that the minimum statutory requirement for a lifelong pension remains intact. This move is expected to provide subscribers with more control over their pension corpus and flexibility in managing their retirement income.

Understanding the Retirement Income Scheme and Drawdown Options

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The RIS Steady is a new fund specifically designed for the payout phase of retirement, which automatically reduces equity exposure as the subscriber ages. The glide path aims to protect subscribers' money as they get older while still allowing some growth.

Subscribers can choose from two drawdown options: the Systematic Payout Rate (SPR) and the Systematic Unit Redemption (SUR). The SPR is the default option, where the withdrawal amount is calculated based on the subscriber's current age and the drawdown period until age 85. The payout rate increases automatically as the subscriber gets older, and the payout rate and amount are reset every year on the subscriber's birthday based on the current corpus value.

Systematic Payout Rate (SPR)

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• Example at age 60: 1 ÷ (85-60) = 4% of corpus withdrawn annually
• Example at age 70: 1 ÷ (85-70) = 6.67% of corpus withdrawn annually

Systematic Unit Redemption (SUR)

• Example: 8,00,000 units spread over 25 years with monthly payouts would result in redemption of 2,666.67 units every month, while the payout amount in rupees would vary based on the prevailing NAV.

These drawdown options are available to government and non-government subscribers (NGS) under NPS who want to receive systematic payouts from their designated pension corpus up to the age of 85 years. The PFRDA has directed pension funds, Central Record Keeping Agencies, and other intermediaries to ensure that payouts carry no guarantee or assurance and are subject to market risks. Additionally, pension funds and Central Record Keeping Agencies are required to provide benefit illustrations, residual corpus projections, payout reset notifications, and asset rebalancing summaries to subscribers.