PFRDA Introduces Flexible Retirement Income Schemes for NPS Subscribers
NPS launches Retirement Income Schemes: Payout rules and benefits explained
Image: Business Standard
The Pension Fund Regulatory and Development Authority (PFRDA) has launched Retirement Income Schemes (RIS) under the National Pension System (NPS), allowing retirees to make phased withdrawals from their corpus. This new framework aims to enhance cashflow predictability and longevity of retirement savings while maintaining exposure to market-linked investments.
- 01Subscribers can now opt for periodic payouts from their retirement corpus, with options for monthly, quarterly, or annual withdrawals.
- 02The Retirement Income Scheme (RIS) allows the remaining corpus after annuity purchase to stay invested, potentially yielding better long-term returns.
- 03Equity exposure under the RIS will decrease from 35% at age 60 to 10% by age 75, balancing growth and risk.
- 04Two payout methods are available: Systematic Payout Rate (SPR) and Systematic Unit Redemption (SUR), which adjust payouts based on age and investment performance.
- 05The new framework addresses concerns that retirees may exhaust their savings too quickly or lock into low-yield annuities.
Advertisement
In-Article Ad
The Pension Fund Regulatory and Development Authority (PFRDA) has introduced a new post-retirement framework under the National Pension System (NPS) called Retirement Income Schemes (RIS), effective from May 15, 2026. This initiative allows subscribers to withdraw funds periodically from their retirement corpus while keeping a portion invested for potential market-linked growth. Previously, retirees could withdraw up to 60% of their corpus tax-free, with the remaining 40% required to be used for annuity purchase. The new framework enables phased withdrawals, enhancing cashflow predictability and promoting corpus longevity.
The Retirement Income Scheme allows the remaining corpus after annuity purchase to stay invested, following a glide path model that reduces equity exposure from 35% at age 60 to 10% by age 75. Subscribers can choose between two payout methods: Systematic Payout Rate (SPR) or Systematic Unit Redemption (SUR), which adjusts payouts based on age and market performance. This new structure aims to provide retirees with more predictable cashflows, better inflation protection, and longer sustainability of their retirement savings, although it does introduce market risks into their retirement phase.
Advertisement
In-Article Ad
The new retirement income framework aims to provide retirees with more predictable cashflows and better inflation protection, helping them manage their finances more effectively during retirement.
Advertisement
In-Article Ad
Reader Poll
Do you think phased withdrawals are a better option for retirement income?
Connecting to poll...
More about Pension Fund Regulatory and Development Authority
Read the original article
Visit the source for the complete story.