- The Pension Fund Regulatory and Development Authority (PFRDA) has launched a new Retirement Income Scheme (RIS) and drawdown facility under the National Pension System (NPS) to provide subscribers with greater flexibility in managing their retirement savings.
- The announcement was made through a circular issued on May 15, 2026, following amendments to the PFRDA (Exits and Withdrawals under the NPS) Regulations, 2025.
What is the New Retirement Income Scheme?
- Under the new framework, NPS subscribers will be allowed to withdraw their pension corpus in a phased manner during the post-retirement or decumulation phase.
- Instead of withdrawing a lump sum amount immediately after retirement, subscribers can now opt for periodic payouts while the remaining corpus continues to remain invested and generate returns under the Retirement Income Scheme.
Key Features of the Drawdown Facility
The new drawdown option offers several flexible features for subscribers:
Flexible Withdrawal Frequency
Subscribers can choose to receive payouts:
- Monthly
- Quarterly
- Annually
Extended Payout Period
The payout facility can continue:
- Up to the age of 85 years, or
- As per the subscriber’s selected option at the time of exit from NPS
Continued Investment Growth
- The unwithdrawn portion of the pension corpus will continue to remain invested under RIS, allowing it to generate returns even after retirement.
Mandatory Annuity Requirement Remains
- PFRDA clarified that the new drawdown facility does not change the mandatory annuitisation rules under NPS.
- Subscribers will still be required to use a prescribed portion of their retirement corpus to purchase an annuity for lifelong pension income.
- The mandatory annuity requirement remains:
- 40% for most subscribers
- 20% for certain government sector categories
- This ensures a regular lifelong pension even while offering additional withdrawal flexibility.
Applicability of the Scheme
The new framework will be available for:
- Government sector NPS subscribers
- Non-government sector NPS subscribers
The regulator stated that the facility will become operational after the necessary technological systems and operational framework are put in place.
Objective Behind the Reform
The initiative aims to:
- Enhance retirement planning flexibility
- Provide periodic income options after retirement
- Improve post-retirement financial management
- Allow pension savings to continue earning returns
The reform is expected to make the National Pension System more attractive and adaptable to the varying financial needs of retirees.
Regulatory Background
- The circular has been issued under the powers granted to PFRDA under Section 14 of the PFRDA Act, 2013.
- The move forms part of broader reforms aimed at strengthening India’s pension ecosystem and improving retirement security for NPS subscribers.