The Pension Fund Regulatory and Development Authority (PFRDA) announced on Friday the launch of Retirement Income Schemes (RIS) and drawdown options for National Pension System (NPS) subscribers. According to reports from Business Standard, the pension regulator issued a circular dated May 15, 2026, building on earlier circulars and following amendments to the PFRDA (Exits and Withdrawals under the NPS) Regulations, 2025. The initiative aims to give retirees greater control over how they receive their pension corpus after retirement, providing more flexibility in pension withdrawal options. As per the PFRDA circular, "Under the RIS, subscribers are provided the flexibility to select a phased withdrawal of their designated pension corpus through any drawdown option."
Under the new framework, NPS subscribers will be able to withdraw a designated portion of their pension corpus in phases through different drawdown options during the decumulation phase. As reported by Business Standard, the regulator stated the initiative is intended to provide periodic payout choices while allowing the remaining corpus to continue generating returns through RIS. The drawdown facility will be available to both government and non-government subscribers under NPS, offering greater flexibility in how retirees access their pension funds. According to the latest reports, subscribers opting for the drawdown options will also have the option of continuing with their existing pension fund and switching their pension fund once every two financial years.
The RIS Steady fund is a new fund specifically designed for the payout phase of retirement, featuring an automatic glide path that reduces equity exposure as subscribers age. At age 60, the fund allocation is 35% equity, 10% corporate bonds, and 55% government securities. By age 75, equity exposure is reduced to 10% and maintained until age 85. The fund automatically adjusts asset allocation based on the subscriber's age, protecting money as they get older while allowing some growth potential. This structured approach ensures that subscribers can access their pension corpus systematically while maintaining appropriate risk management during retirement.
According to the circular, withdrawals made under the RIS framework will not affect the mandatory annuitisation requirement under NPS. As reported by Business Standard, subscribers are still required to use the minimum prescribed portion of their corpus - 20 per cent or 40 per cent, depending on the category - for purchasing an annuity to ensure a lifelong pension. The authority clarified that this mandatory requirement remains unchanged despite the new drawdown options, ensuring that retirees maintain adequate income security throughout their retirement years. The PFRDA has also directed pension funds (PFs), Central Record Keeping Agencies (CRAs), and other intermediaries to ensure that payouts carry no guarantee or assurance and are subject to market risks.
Subscribers will have the option to receive payouts on a monthly, quarterly or annual basis under the new framework. According to Business Standard, the payout period can continue up to the age of 85 years or according to the choice exercised by the subscriber at the time of exit. The withdrawal amount is calculated using the formula 1 ÷ (85 minus your current age) = your annual payout rate. At age 60, the payout rate is 4% of corpus annually, while at age 70, it increases to 6.67%. The payout rate and amount are reset every year on your birthday based on the current corpus value, with any residual corpus left at the end of the payout period available for withdrawal as a lump sum or used to buy an annuity. The guidelines will come into effect from a date to be notified later, after the necessary system capabilities and operational framework are put in place.
