NPS launches Retirement Income Schemes: Key FAQs on new pension drawdown options

The regulator introduced the framework through a circular dated May 15, 2026.

What are Retirement Income Schemes (RIS)?

PFRDA said the new life-cycle scheme available to subscribers for receiving periodic payouts shall be called the Retirement Income Scheme (RIS).

Under RIS, subscribers are provided the flexibility to select phased withdrawal of their designated pension corpus through drawdown options. The regulator said these withdrawals shall have no impact on the mandatory annuitisation requirement of 20% or 40% of the corpus, as applicable.

• Systematic Payout Rate (SPR) – Default option

• Systematic Unit Redemption (SUR) – Equal Units

The choice of drawdown option will have to be exercised at the time of closure of the pension account, after which fresh contributions will stop.

Who can opt for these drawdown options?

The drawdown options shall be available to Government and Non-Government Subscribers (NGS) under NPS.

Subscribers will be 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.

PFRDA also said subscribers opting for drawdown options will have the option of continuing with their existing pension fund. Subscribers will additionally be allowed to switch their pension fund once every two financial years.

PFRDA has introduced “RIS Steady” as a variant under Retirement Income Schemes.

Under this option, equity exposure will reduce gradually with age through a declining annual glide path. Equity allocation will reduce from 35% at age 60 to 10% at age 75 and remain constant thereafter till age 85.

• Asset Class E: 35%

• Asset Class C: 10%

• Asset Class G: 55%

• Asset Class E: 10%

• Asset Class C: 15%

• Asset Class G: 75%

How the Systematic Payout Rate (SPR) will work

Under the SPR option, the payout rate will depend on the drawdown end age and the current age of the subscriber.

The systematic payout amount shall be reset annually on the subscriber’s date of birth based on the prevailing market value of the drawdown corpus.

PFRDA said the payout rate for a subscriber exiting at age 60 and opting for drawdown till age 85 will start at 4% and increase progressively with age.

How Systematic Unit Redemption (SUR) will work

Under the SUR-Equal Units option, the total unit balance at the start of drawdown will be liquidated in equal instalments over the selected drawdown period.

• ₹80 lakh corpus,

• NAV of 10,

• 25-year drawdown period, and

• monthly payout frequency

will see redemption of around 2,666.67 units every month.

What happens to the residual corpus?

Under the SPR option, there may be residual corpus left at the end of the drawdown period.

Withdraw the residual corpus as a lump sum, or

Combine the residual corpus with the annuity component, if deferred, to purchase annuity as per applicable regulations.

PFRDA has directed Pension Funds and Central Record Keeping Agencies (CRAs) to provide disclosures regarding:

• 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.

When will the rules become effective?

The guidelines shall take effect from a date to be notified separately by the Authority following implementation of the necessary system capabilities and operational framework.