The Pension Fund Regulatory and Development Authority (PFRDA) has introduced the Retirement Income Scheme (RIS) that allows retirees to withdraw non-annuitized corpus in a regular and systematic manner. According to reports from Mint, this scheme allows retirees to keep the non-annuitized corpus within the NPS, instead of withdrawing it as a lump sum, and draw regular income until the age of 85. The mandatory annuity portion remains separate and unchanged, with RIS only governing the drawdown of the remaining corpus. The National Pension System (NPS) is a voluntary, long-term retirement scheme regulated by the PFRDA that is open to almost every Indian citizen between the ages of 18 and 70. The account typically invested in is called a Tier 1 account, which offers tax benefits and withdrawal restrictions, with an optional Tier 2 account for flexible investment without lock-in periods.
A subscriber turning 60 or exiting after 15 years can leave the lump-sum portion inside NPS in a purpose-built fund called RIS Steady. As reported by Mint, the fund works as a glide-path fund starting with 35% equity, 10% corporate bonds, and 55% government securities at age 60. The allocation gradually reduces equity exposure as the subscriber ages, with equity down to 15% by 70, 10% by 75, and 75% government securities by 80 and beyond. The residual corpus, if any, goes to the nominee on death, or can be taken as lump sum by the subscriber. Inside the NPS, your money goes into a mix of asset classes: equity, corporate bonds, government bonds and a small allocation to alternative assets. You choose how the money is split in one of two ways, with the NPS normally maturing at age 60.
The PFRDA has introduced two drawdown mechanisms - the default systematic payout rate (SPR) and the alternative systematic unit redemption (SUR). According to Mint, under SPR, the annual payout rate is calculated as 1 ÷ (85 minus your current age). For example, at 60, this gives a 4% withdrawal rate, at 70, 6.7%, and by 80, 20%. Under SUR, the total unit balance is divided equally across all remaining payouts, with the number of units redeemed staying fixed throughout. Both strategies started at the same monthly payout of around ₹26,667 for a ₹80 lakh corpus. The NPS deliberately does not hand you the whole corpus in cash, forcing a portion into a lifelong pension to protect you from spending the entire corpus too early.
Samasthiti Advisors ran 10,000 simulations across good, average, and poor market scenarios to compare the two withdrawal methods over a 25-year period. As reported by Mint, both strategies started at the same monthly payout of around ₹26,667, but showed different trajectories. Under systematic payout rate, payouts dipped to ₹14,898 by year 25 as the formula forced larger withdrawals from a depleted corpus. Under systematic unit redemption, payouts moved steadier: ₹26,702 at year 25 in poor market scenarios. The cut-to-boost ratio was 2.9 for systematic payout rate versus 0.9 for systematic unit redemption in good markets. The annuity portion is the weak spot of the NPS, with annuity rates in India being modest, often around 6 percent, and the pension being taxable.
According to Mint reports, retirees with substantial other income may prefer systematic payout rate for higher discretionary spending during active retirement years. Dhirendra Kumar from Value Research noted that retirees need to map their income sources, fixed obligations, and monthly expenses first before deciding which drawdown option works. The study also showed that subscribers with adequate retirement income from other sources may prefer to defer withdrawals until 80 and decide later whether to purchase annuity, begin systematic withdrawals, or adopt another strategy. The NPS is one of the cheapest investment products in the world, with its fund management charge being a tiny fraction of a percent, far lower than a typical mutual fund. Over a 30-year horizon, that low cost quietly leaves a meaningfully larger corpus in your hands, because fees compound against you just as returns compound for you.
