The Pension Fund Regulatory and Development Authority (PFRDA) has introduced a new post-retirement framework under the National Pension System (NPS), allowing subscribers to receive periodic payouts from their retirement corpus while keeping a portion of their money invested for potential market-linked growth. According to reports from Business Standard, the regulator launched Retirement Income Schemes (RIS) and drawdown options in a circular dated May 15, 2026, aimed at improving "cashflow predictability during the retirement phase and corpus longevity of the subscriber". As per Angel One News, the PFRDA has stated that the guidelines for these new initiatives will be implemented from a date to be announced once the necessary operational frameworks are ready, ensuring proper implementation infrastructure is in place before launch. The initiative has been launched in line with the PFRDA (Exit and Withdrawal under NPS) (Amendment) Regulations, 2025, as confirmed by the regulator. The move marks a significant shift in how NPS retirees can access their pension savings after retirement, as until now, most NPS subscribers at retirement could withdraw up to 60 per cent of their corpus tax-free and were required to use at least 40 per cent to purchase an annuity. The lump sum portion was usually taken out at one go.
The biggest change is the introduction of a drawdown facility from the withdrawable portion of the retirement corpus. As reported by Business Standard, subscribers can now opt for periodic payouts — monthly, quarterly, or annually from the lump sum amount retained under NPS. The regulator clarified that the new facility "shall have no impact on the mandatory annuitisation requirement of 20 per cent or 40 per cent of the corpus," meaning the compulsory pension purchase requirement remains unchanged. The facility allows subscribers to choose between Systematic Payout Rate (SPR) and Systematic Unit Redemption (SUR) methods. According to Angel One News, both government and non-government subscribers under NPS can access these flexible retirement payout options, enabling comprehensive management of retirement resources. The withdrawal options will be available to both government and non-government sector subscribers under NPS, with eligible subscribers able to receive periodic payouts on a monthly, quarterly or annual basis up to the age of 85 years, based on the option selected at the time of exit from the pension system. The regulator noted that the new structure has been designed to help retirees manage regular income needs without exhausting their corpus too quickly.
The Retirement Income Scheme (RIS) is a dedicated post-retirement investment option under NPS where the subscriber's remaining corpus after annuity purchase can stay invested instead of being withdrawn immediately. According to the circular, the RIS would follow an annual glide path model under a scheme called "RIS Steady". Under this option, equity exposure will gradually decline from 35 per cent at age 60 to 10 per cent by age 75, and remain at that level until age 85. The PFRDA has introduced a new lifecycle fund, "RIS Steady (Balanced)" under the Retirement Income Schemes category, which adopts a declining equity allocation model. As reported by Angel One News, government securities exposure increases with the subscriber's age, and adjustments to corporate bond allocations occur gradually, creating a more balanced investment approach. The scheme will follow a declining equity allocation structure, with exposure to government securities increasing progressively with age, while allocation to corporate bonds will also be adjusted gradually during the withdrawal phase. The regulator believes this glide path may help retirees earn better long-term returns and maintain inflation-adjusted cashflows during retirement years.
PFRDA cautioned subscribers that there is "no guarantee or assurance of fixed payout" under the drawdown framework because the money will continue to remain exposed to market-linked investments. As reported by Business Standard, the actual payout amount will vary depending on market-linked NAV movements. The regulator illustrated this concept with an example of a subscriber retiring at age 60 with an ₹80 lakh corpus under drawdown, where 2,666.67 units would be redeemed monthly based on the calculation formula provided in the circular. According to Angel One News, the regulator illustrated the concept with an example assuming a net asset value (NAV) of ₹10, where a subscriber would hold 8 lakh units and if the drawdown period is fixed at 25 years with monthly payouts, the number of units redeemed every month would be calculated as "Total number of units at start / drawdown period × payout frequency". The actual payout amount will vary depending on market-linked NAV movements, with the regulator noting that "gliding path equity participation may ensure a higher growth of the corpus" even as retirees continue to receive periodic payouts.
For retirees, the new framework may offer more predictable cashflows after retirement, better inflation protection through market participation, and longer sustainability of retirement savings. However, the structure also introduces market risk into the retirement phase since the corpus remains invested. According to Business Standard, subscribers choosing the drawdown facility will be allowed to continue with their existing pension fund manager or switch once every two financial years. The schemes will be available up to the age of 85 years or any lower age chosen by the subscriber at the time of exit from NPS. Under SPR, payouts will depend on the subscriber's current age and selected drawdown end age, with the payout percentage adjusting over time to ensure the corpus lasts through the selected retirement period. The second method, SUR, works through redemption of a fixed number of units periodically. The new framework reduces the burden to lock large amounts into annuity plans immediately while providing regular income after retirement. The regulator noted that under SPR, if a subscriber using the drawdown facility passes away during the payout phase, the remaining balance in their account, after accounting for any scheduled payments already made, will be paid in accordance with the PFRDA.
