The Pension Fund Regulatory and Development Authority (PFRDA) has issued a circular dated May 15, 2026, introducing Retirement Income Schemes (RIS) and expanded drawdown options under the National Pension System (NPS). The framework is aimed at making the retirement payout phase more flexible while ensuring continued corpus growth potential and preservation of long-term pension security.
The new provisions have been introduced in line with the PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025 and will come into effect after the implementation of necessary system-level and operational requirements.
Objective of the new framework
According to the circular, the primary objective of the RIS framework and drawdown facility is to:
- Improve periodic cash flow predictability during the decumulation phase
- Enable systematic market-linked withdrawals from the accumulated corpus
- Support corpus longevity and reduce the risk of early exhaustion of retirement savings
- Continue enabling corpus appreciation even during payout phase
Importantly, the circular clarifies that RIS and drawdown mechanisms are intended only for phased withdrawals and do not alter the mandatory annuitisation requirement of 20 per cent or 40 per cent of the corpus, as applicable under existing rules, ensuring the continuity of life-long pension security.
Introduction of Retirement Income Schemes (RIS)
The circular introduces a dedicated life-cycle investment structure called Retirement Income Schemes (RIS), designed specifically for managing retirement withdrawals under NPS.
What is the RIS Steady variant?
The flagship variant, RIS Steady, follows a gradual glide path approach for asset allocation, with equity exposure designed to decline with age:
- Equity allocation reduces progressively from retirement age onwards
- It moves from 35 per cent at age 60 to a floor of 10 per cent by age 75
- Thereafter, the allocation is maintained at the minimum level up to age 85
The remaining allocation is distributed across debt and government securities in line with the scheme framework. The structured glide path is intended to balance growth potential with capital stability during retirement years.
| Age / Stage | Equity (E) | Corporate Debt (C) | Government Securities (G) |
|---|---|---|---|
| Up to 60 years | 35% | 10% | 55% |
| 61 years | 33% | 11% | 56% |
| 62 years | 31% | 12% | 57% |
| 63 years | 29% | 13% | 58% |
| 64 years | 27% | 14% | 59% |
| 65 years | 25% | 15% | 60% |
| 66 years | 23% | 16% | 61% |
| 67 years | 21% | 17% | 62% |
| 68 years | 19% | 18% | 63% |
| 69 years | 17% | 19% | 64% |
| 70 years | 15% | 20% | 65% |
| 71 years | 14% | 20% | 66% |
| 72 years | 13% | 20% | 67% |
| 73 years | 12% | 20% | 68% |
| 74 years | 11% | 20% | 69% |
| 75 years | 10% | 20% | 70% |
| 76 years | 10% | 19% | 71% |
| 77 years | 10% | 18% | 72% |
| 78 years | 10% | 17% | 73% |
| 79 years | 10% | 16% | 74% |
| 80 years and above | 10% | 15% | 75% |
Drawdown options under NPS
The circular introduces two structured drawdown mechanisms through which subscribers can receive periodic payouts from the non-annuitised portion of their corpus after exit:
1) Systematic Payout Rate (SPR)–Default option
2) Systematic Unit Redemption (SUR)–Equal Units method
Subscribers may choose to receive payouts on a monthly, quarterly, or annual basis, with drawdown permitted up to age 85 or any age selected at exit.
Subscribers also retain the option to continue with their existing pension fund and are permitted to switch pension funds once in every two financial years, subject to the framework conditions.
Systematic Payout Rate (SPR)
Under the SPR mechanism, payouts are calculated as a function of the remaining drawdown period and the prevailing market value of the corpus.
- The payout rate is age-dependent and increases as the remaining drawdown period shortens
- The rate is recalculated annually on the subscriber’s date of birth
- Each reset reflects the prevailing market value of the corpus
- The system ensures structured distribution of withdrawals across the chosen retirement horizon
The payout amount is therefore dynamic and adjusts annually based on corpus value and remaining tenure.
Systematic Unit Redemption (SUR)
Under the SUR (Equal Units) method, withdrawals are made by redeeming units in a systematic and proportionate manner over the selected drawdown period.
- Total accumulated units at exit are divided equally across the payout tenure
- Units are redeemed in equal instalments based on chosen frequency (monthly/quarterly/annual)
- Redemptions are proportionate across all asset classes in the portfolio
For example, if a subscriber holds 8,00,000 units and selects a 25-year monthly drawdown period, units are evenly distributed across the total number of payout instalments over the tenure.
Safeguards and mandatory disclosures
To ensure transparency and informed decision-making, the circular mandates detailed disclosures by Pension Funds, Central Record Keeping Agencies (CRAs), and other intermediaries.
Subscribers must be clearly informed that:
- No guaranteed returns apply under drawdown payouts
- All payouts are subject to market risk
- Illustrative projections of payouts and residual corpus must be provided
- Annual retirement income statements must be issued separately from Tier I and Tier II statements
The statement will include details such as:
- Annual reset notifications for SPR subscribers
- Asset allocation changes under the glide path
- Summary of corpus performance and payout adjustments
Residual corpus treatment
The circular provides flexibility for any residual corpus remaining after completion of the drawdown period under SPR:
Subscribers may choose to:
- Withdraw the entire residual corpus as a lump sum, or
- Use it along with the annuity component (if deferred) to purchase an annuity, in accordance with applicable regulations
Applicability and operational timeline
The circular applies to both:
- Government subscribers
- Non-Government Subscribers (NGS)
It will come into effect only after system capabilities and operational frameworks are implemented by the Authority.
The provisions have been issued under the powers conferred by Section 14 of the PFRDA Act, 2013.
