The Pension Fund Regulatory and Development Authority (PFRDA) has introduced the Retirement Income Scheme (RIS) with two new drawdown options - Systematic Unit Redemption (SUR) and Systematic Payout Rate (SPR). According to reports from Personal Finance News, these options are available in addition to the traditional annuity option, where investors can invest up to 100% of the accumulated NPS corpus to buy a monthly payout scheme from approved insurers. However, purchasing the annuity with at least 40% of the corpus (or 20% of the corpus under MSF) is mandatory. The Unified Pension Scheme (UPS) was launched on April 1, 2025, providing an assured monthly pension for central government employees based on years of service, independent of market performance.
The Unified Pension Scheme operates within the same NPS architecture using the same PRAN numbers and PFRDA regulation, but adds a guaranteed pension floor. For employees completing 25 or more years of service, the pension equals 50% of their average basic pay over the final 12 months before retirement - a commitment, not a projection. For those with 10-25 years of service, the pension is proportional and adjusted downward from the full 50%. A minimum pension of ₹10,000 per month is guaranteed for employees with at least 10 years of qualifying service. The scheme includes inflation protection using the same dearness relief mechanism as serving employees, linked to the All India Consumer Price Index for Industrial Workers (AICPI-IW). Additionally, family pension is provided - if a pensioner passes away, the family immediately receives 60% of the pension being paid at that time, with no separate application or waiting period.
Annuity plans typically offer returns in the range of 6% to 6.5%. As reported by Personal Finance News, under the annuity option, subscribers receive monthly assured payouts, but the corpus can be exhausted at the end of the drawdown period if the return of premium option is not chosen. The required corpus calculation shows that to withdraw ₹1 lakh per month for 25 years from a plan growing at 6.5%, a starting corpus of around ₹1.5 crore would be required. For women specifically, a retirement corpus calculation using the 25x rule shows that for a woman needing ₹70,000 per month, the target in today's money is ₹2.1 crore, but adjusted for 20 years of 6% inflation, the actual figure rises to ₹9 to 10 crore.
Under the RIS Steady option, subscribers can choose to withdraw their mandatory annuity portion and invest the lump sum part partially or fully in RIS. According to PFRDA, the scheme invests in equity (35%), corporate bonds (10%), and government bonds (55%) in a predefined portion. The RIS Steady option employs a continuously declining, annual glide path that reduces equity exposure from 35% at age 60 to a floor of 10% at age 75, held constant thereafter until age 85. This glide path optimises periodic payouts, enhances cashflow predictability and corpus longevity through continued support to corpus appreciation, while minimising the risk of early corpus exhaustion before the end of the withdrawal period.
UPS is currently available only to central government employees within the NPS framework. Employees who joined central government service from April 1, 2025 onwards are covered by UPS by default, though they can choose NPS within 30 days of joining. Those who retired on or before March 31, 2025 with at least 10 years of qualifying service can opt in to receive UPS benefits. However, switching from NPS to UPS is permanent and irreversible - once made, it cannot be reversed under any circumstance. The option to move from NPS to UPS is available only to central government employees, as the scheme is not available to state government employees or private sector workers. This permanent nature makes careful assessment essential, particularly for employees with significant existing NPS corpus, especially those nearing retirement.
