The Pension Fund Regulatory and Development Authority (PFRDA) has introduced Retirement Income Schemes (RIS) and drawdown options under the National Pension System (NPS) to provide subscribers with flexible periodic payout options during the decumulation phase while continuing to support corpus appreciation. According to the latest PFRDA circular dated May 15, 2026, this initiative builds upon previous frameworks established through Circular No. PFRDA/2016/8/PFM/03 dated 04 November 2016, Circular No. PFRDA/2023/30/SUP-CRA/10 dated 27 October 2023, and Circular No. PFRDA/2024/17/PDES/02 dated 01 October 2024. The regulator introduced the framework in line with the PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025, marking a significant shift in NPS retirement planning flexibility.
Under RIS, subscribers are provided the flexibility to select phased withdrawal of their designated pension corpus through two primary drawdown options: Systematic Payout Rate (SPR) and Systematic Unit Redemption (SUR). As reported by PFRDA, these withdrawals shall have no impact on the mandatory annuitisation requirement of 20% or 40% of the corpus, as applicable, ensuring the minimum statutory requirement for life-long pension through annuity remains intact. Subscribers will receive periodic payouts from the lump sum portion of their accumulated pension wealth through these options, with the choice of drawdown option exercised at the time of closure of the pension account. Under the Systematic Payout Rate (SPR) option, the payout rate depends on the drawdown end age and the current age of the subscriber, with the systematic payout amount reset annually on the subscriber's date of birth based on the prevailing market value of the drawdown corpus. For a subscriber exiting at age 60 and opting for drawdown till age 85, the payout rate will start at 4% and increase progressively with age. Under the Systematic Unit Redemption (SUR) option, the total unit balance at the start of drawdown will be liquidated in equal instalments over the selected drawdown period, with examples showing redemption of around 2,666.67 units every month for an ₹80 lakh corpus.
The drawdown options are available to Government and Non-Government Subscribers (NGS) under NPS, with subscribers allowed to receive payouts on a monthly, quarterly or annual basis for a period up to 85 years of age or as per the choice exercised at the time of exit from NPS. According to PFRDA, subscribers opting for drawdown options will have the option of continuing with their existing pension fund and will additionally be allowed to switch their pension fund once every two financial years. The regulator has also introduced 'RIS Steady' as a variant under Retirement Income Schemes, featuring a declining annual glide path where equity allocation reduces from 35% at age 60 to 10% at age 75. Upon successful processing of a drawdown request, periodic payouts shall be initiated from the following month, with subscribers receiving constant systematic payouts calculated using the above methodology from their current date of birth up until their next date of birth.
PFRDA has directed Pension Funds and Central Record Keeping Agencies (CRAs) to provide comprehensive disclosures regarding the absence of guaranteed or assured payouts, market risks associated with payouts, benefit illustrations and residual corpus projections, and annual reset notifications and asset rebalancing summaries for subscribers. According to PFRDA, these guidelines shall take effect from a date to be notified separately by the Authority following implementation of the necessary system capabilities and operational framework. The charges shall be governed as per existing framework applicable to such schemes. In case of demise during the payout phase, the remaining balance in the account after accounting for any scheduled payments will be paid in accordance with the PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015, as amended from time to time, with units from each asset class redeemed for amount withdrawal in proportion to wealth in respective asset class.
