The Pension Fund Regulatory and Development Authority (PFRDA) has introduced new Retirement Income Schemes (RIS) and drawdown options that allow you to access your retirement corpus in a more phased and flexible manner, instead of taking the permitted lump sum in one go.
The move gives subscribers an opportunity to stay invested for longer, potentially grow their retirement corpus through market-linked returns, and receive regular income after retirement—all without affecting the mandatory annuity purchase requirement under NPS, according to a circular issued on May 15 by PFRDA.
The circular dated May 15, 2026, builds upon earlier PFRDA guidelines and the PFRDA (Exits and Withdrawals under NPS) Regulations, 2025. The move aims to allow for more flexible periodic payout options during the transition phase from accumulation to withdrawal, while still supporting long-term retirement income needs, as per the regulator.
What are the Retirement Income Schemes (RIS) under NPS?
Retirement Income Schemes (RIS) are well-organized payout options that allow NPS subscribers to withdraw their pension corpus in a gradual manner instead of withdrawing the entire permissible lump sum at retirement.
“Under the RIS, subscribers are provided the flexibility to select a phased withdrawal of their designated pension corpus through any drawdown option. Consequently, these withdrawals shall have no impact on the mandatory annuitisation requirement of 20% or 40% of the corpus, as the case may be, thus ensuring that the minimum statutory requirement for a life-long pension remains intact,” said PFRDA in the circular.
Both government and non-government subscribers (NGS) under NPS will have access to these drawdown alternatives. Subscribers will be eligible to receive payouts on a regular basis—monthly, quarterly, or annually—for as long as they are 85 years of age or until they exit NPS, based on their preference.
Furthermore, the new drawdown facility will not impact the mandatory annuity purchase requirement that is already in place under NPS. Currently, the minimum corpus requirement for annuity purchase at retirement for subscribers is 40%, and for government subscribers, it is 40% and 80% in certain early exit cases.
The framework has been introduced to offer greater flexibility in retirement withdrawals, facilitate subscribers to receive periodic income post-retirement, enable retirees to stay invested in market-linked growth, enhance retirement planning options under NPS, ensure compliance with minimum annuity purchase requirement, PFRDA said. The regulator further clarified that the new facility will not affect the mandatory annuity purchase requirement under NPS rules.
Key features of RIS and drawdown options
Some of the major features introduced under the new framework include:
- Periodic payouts from accumulated pension wealth
- Flexible withdrawal frequencies such as monthly, quarterly or yearly
- Option to continue market participation through the remaining corpus
- Availability for both government and private sector subscribers
- Drawdown allowed up to the age of 85 years
- Facility to select different payout methodologies
- Annual reset mechanism for payout calculations in certain options
New NPS retirement plan reduces equity exposure from 35% to 10% by age 75
Additionally, the regulator has launched a new investment option for Retirement Income Schemes called “RIS Steady,” which follows a strategy of gradually reducing equity allocation during retirement years. Equity exposure will fall from 35% at age 60 to 10% at age 75, and will then remain constant. The balance of the corpus will continue to be invested in other asset classes like corporate bonds and government securities.
| Age Bracket | Asset Class E | Asset Class C | Asset Class 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% |
Types of drawdown options introduced
Systematic Payout Rate (SPR)
The new frameworks also mandate different payout options for subscribers opting for phased withdrawals. The Systematic Payout Rate (SPR) model is one of the most important approaches. This method calculates the payouts based on the subscriber’s age and the selected end age of the drawdown. The payout percentage grows steadily as the subscriber gets older.
For example, if a subscriber exits NPS at age 60 and chooses drawdown until age 85, the payout rate starts at 4% at age 60 and rises steadily every year. It reaches 10% by age 75 and continues increasing thereafter, touching 100% at age 84 to ensure the corpus is fully utilised by age 85.
The payout amount under SPR will be recalculated every year based on the remaining corpus value and the age of the subscriber. This means the payout may depend on market performance and the value of the remaining investment corpus.
For a subscriber exiting the system at age 60 and selecting to drawdown through SPR, up until the drawdown end Age of 85 years, the age-wise Systematic Payout Rate shall be as per the table below as per PFRDA:
| Age | Payout Rate |
| 60 | 4.00% |
| 61 | 4.17% |
| 62 | 4.35% |
| 63 | 4.55% |
| 64 | 4.76% |
| 65 | 5.00% |
| 66 | 5.26% |
| 67 | 5.56% |
| 68 | 5.88% |
| 69 | 6.25% |
| 70 | 6.67% |
| 71 | 7.14% |
| 72 | 7.69% |
| 73 | 8.33% |
| 74 | 9.09% |
| 75 | 10.00% |
| 76 | 11.11% |
| 77 | 12.50% |
| 78 | 14.29% |
| 79 | 16.67% |
| 80 | 20.00% |
| 81 | 25.00% |
| 82 | 33.33% |
| 83 | 50.00% |
| 84 | 100.00% |
Default drawdown / percentage-based payout option
In order to ensure gradual withdrawals while keeping the remaining corpus under market participation, the framework also offers an alternative drawdown approach in which payouts are linked to a predetermined percentage structure.
Exit and withdrawal rules under RIS
The guidelines specify that subscribers opting for RIS can continue receiving payouts from the drawdown corpus while ensuring compliance with NPS annuity rules.
The framework also clarifies that:
- The drawdown corpus will continue to remain invested under the NPS ecosystem
- Market-linked gains or losses will continue to impact the remaining corpus
- Payouts can be credited periodically, as selected by the subscriber
- The payout amount may vary depending on corpus value and chosen payout structure
- Subscribers must comply with annuity purchase rules prescribed under NPS regulations
What does this mean for NPS subscribers?
The introduction of RIS will drastically change the way NPS subscribers manage retirement income post exit. In traditional plans, there was little flexibility for the subscriber between lump sum withdrawals and annuity purchases. The new framework also introduces a phased withdrawal approach, enabling retirees to generate a regular income while keeping a portion of their retirement savings invested. The new system may offer better flexibility to retirees who do not wish to withdraw their entire permissible corpus immediately or lock a large amount into annuities in one go, and possibly better long-term retirement planning.
At the same time, as the remaining corpus remains market-linked, subscribers will also have to factor in investment risk, market volatility, and longevity planning before selecting a drawdown strategy.
Disclaimer: This article is for informational purposes only and should not be considered financial, investment, tax, or retirement planning advice. NPS withdrawal, annuity, and drawdown rules are subject to PFRDA regulations and may change from time to time. Subscribers should carefully evaluate their financial goals, risk appetite, and retirement needs before choosing any payout or drawdown option. Please consult a certified financial advisor or refer to official PFRDA guidelines for personalised advice and the latest updates.