If you're an NPS subscriber, this is one of the biggest changes to your retirement planning toolkit in years. PFRDA, through a circular dated May 15, 2026, introduced Retirement Income Schemes (RIS) and new drawdown options under NPS. Here's what it means for you.

What's Changing?

Until now, NPS subscribers had a fairly rigid exit process at retirement. Subscribers could withdraw up to 60% of their corpus tax-free and were required to use at least 40% to purchase an annuity — and the lump sum was usually taken out all at once.

The new RIS framework allows the subscriber's remaining corpus after annuity purchase to stay invested instead of being withdrawn immediately — potentially helping retirees earn better long-term returns and maintain inflation-adjusted cashflows during retirement.

What Is RIS (Retirement Income Scheme)?

RIS is a new life-cycle scheme under NPS designed specifically for receiving periodic payouts during the decumulation phase. Under RIS, subscribers get the flexibility to select phased withdrawal of their designated pension corpus through drawdown options.

The key purpose behind RIS is to enhance the predictability of periodic cash flows in the decumulation stage and facilitate systematic, market-based withdrawals from the accumulated corpus.

RIS Steady — The Flagship Variant

The flagship variant, RIS Steady, adopts a gradual glide path in asset allocation, with equity exposure declining as the subscriber ages.

Equity Glide Path Under RIS Steady :

Age

Equity Allocation

Debt + G-Sec

60 years

35%

65%

65 years

~26%

~74%

70 years

~18%

~82%

75 years

10%

90%

75–85 years

10% (fixed)

90% (fixed)

The structured glide path is designed to balance growth potential with capital stability as you age.

How Will Payouts Work?

Subscribers can receive payouts on a monthly, quarterly, or annual basis, continuing up to the age of 85 years.

There are two payout methods to choose from:

SPR vs SUR — Payout Options Compared :

Feature

SPR (Systematic Payout Rate)

SUR (Systematic Unit Redemption)

How it works

% of corpus paid out

Fixed units redeemed periodically

Payout amount

Varies with age & NAV

Depends on unit value

Starting rate (age 60, till 85)

4% per year

Based on units chosen

Annual reset

Yes, on date of birth

Periodic

Best for

Predictable income

Flexibility in unit control

Real Example: ₹80 Lakh Corpus at Age 60

Let's say you retire at 60 with ₹80 lakh under the drawdown corpus (8 lakh units at NAV ₹10), opting for drawdown till age 85 under SPR:

Indicative Payout Schedule (SPR Method) :

Age

Payout Rate

Annual Payout (approx.)

Remaining Corpus (approx.)

60

4.0%

₹3,20,000

₹76,80,000

65

~5.0%

₹3,84,000

₹72,00,000

70

~6.5%

₹4,68,000

₹64,00,000

75

~8.5%

₹5,44,000

₹52,00,000

80

~11.0%

₹5,72,000

₹36,00,000

85

Final exit

Remaining corpus withdrawn

—

These are indicative figures. Actual payouts depend on prevailing NAV and market performance. No fixed returns are guaranteed.

Mandatory Annuity Rules — Nothing Changes Here

PFRDA clarified that the new facility has no impact on the mandatory annuitisation requirement. The compulsory pension purchase requirement remains unchanged.

Annuity Requirements at a Glance :

Subscriber Type

Minimum Annuity Purchase

Government employees

40% of corpus

Non-government employees

20% of corpus

Corpus ≤ ₹8 lakh

100% lump sum allowed (no annuity needed)

Who Can Use This?

The drawdown facility is available to both government and non-government NPS subscribers.

When Does It Come Into Effect?

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

Why This Matters

This reform gives NPS subscribers far more control over post-retirement finances. Instead of a forced one-time lump sum or being locked into an annuity, you can now let your corpus keep working in the market while drawing steady income — much like an SWP in mutual funds, but within your pension account.

For long-term investors, this could significantly improve retirement income sustainability, especially as life expectancy in India continues to rise.

Source: PFRDA Circular dated May 15, 2026 | pfrda.org.in