PFRDA Introduces Retirement Income Schemes (RIS) and Drawdown Options under NPS

PFRDA Introduces Retirement Income Schemes (RIS) and Drawdown Options under NPS

New Delhi, May 18, 2026: In a major reform aimed at improving retirement income flexibility, the Pension Fund Regulatory and Development Authority (PFRDA) has introduced Retirement Income Schemes (RIS) and new drawdown options under the National Pension System (NPS).

The move is expected to provide both government and non-government NPS subscribers with more control over their post-retirement income planning.

The new framework has been announced through PFRDA Circular dated 15 May 2026 and is designed to help retirees receive systematic payouts from their accumulated pension corpus while continuing to benefit from market-linked growth.

What is the New Retirement Income Scheme (RIS)?

Under the new guidelines, PFRDA has introduced a dedicated post-retirement investment option called the Retirement Income Scheme (RIS). This scheme is specially designed for subscribers who wish to receive regular payouts after retirement instead of withdrawing the entire eligible lump sum at once.

Currently, one variant has been launched under RIS — RIS Steady.

This option follows a gradual asset allocation model where equity exposure decreases with age to reduce risk over time.

Under RIS Steady:

• Equity allocation starts at 35% at age 60
• Gradually declines every year
• Reaches 10% by age 75
• Remains stable thereafter

This approach aims to balance growth and safety for retired subscribers.

New Drawdown Options for NPS Subscribers

PFRDA has also introduced flexible drawdown mechanisms for systematic withdrawal of retirement corpus.

Subscribers can now choose from:

1. Systematic Payout Rate (SPR) – Default Option
Under this option, payout amounts are calculated based on subscriber age and remaining drawdown period.

2. Systematic Unit Redemption (SUR – Equal Units)
Here, equal units from the retirement corpus will be redeemed periodically to generate income.

Subscribers can receive payouts in the following modes:

• Monthly
• Quarterly
• Annually

The payout period can continue up to the subscriber reaching 85 years of age.

Mandatory Annuity Purchase Rule Remains

PFRDA has clarified that this new facility will not change the existing annuity purchase requirement.

Subscribers must still allocate:

• 40% of corpus for annuity (in most cases)
• 20% in applicable cases

Only the remaining eligible lump sum portion can be used for the drawdown facility.

Market-Linked Returns, No Guarantee

Subscribers should note that this is not a guaranteed pension product.

PFRDA has clearly stated that:

• payouts will depend on market performance
• returns are subject to investment risk
• payout amounts may change over time

Under the SPR option, payout rates will reset every year based on the subscriber’s age and prevailing corpus value.

For example, for a subscriber retiring at age 60 and choosing payout till age 85:

• Age 60: 4.00%
• Age 65: 5.00%
• Age 70: 6.67%
• Age 75: 10.00%

Additional Features

The guidelines also allow:

• continuation with the existing pension fund manager
• switching pension fund once every two financial years
• payment of remaining corpus to nominees in case of subscriber death during drawdown

When Will It Start?

Although announced, the facility will become operational only after PFRDA completes the required system readiness and officially notifies the implementation date.

Final Take

This reform marks a significant step in modernizing NPS retirement planning. By allowing phased withdrawals and continued investment growth, the new Retirement Income Scheme can help retirees manage their finances more efficiently instead of relying only on lump sum withdrawals or traditional annuity products.