PFRDA Introduces Retirement Income Schemes (RIS) and Flexible Drawdown Options Under NPS
The Pension Fund Regulatory and Development Authority (PFRDA) has rolled out a comprehensive new framework for post-retirement income management under the National Pension System (NPS). Through Circular No. PFRDA/2026/31/MWnR/01 dated 15th May 2026, PFRDA has formally introduced Retirement Income Schemes (RIS) along with structured drawdown options, enabling NPS subscribers to receive flexible, periodic payouts during their retirement years while simultaneously allowing their remaining corpus to continue growing through market-linked instruments.
This initiative draws upon the foundation laid by earlier circulars — Circular No. PFRDA/2016/8/PFM/03 dated 04 November 2016, Circular No. PFRDA/2023/30/SUP-CRA/10 dated 27 October 2023, and Circular No. PFRDA/2024/17/PDES/02 dated 01 October 2024 — and is aligned with the PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025.
Legal Authority and Regulatory Basis
The circular and its accompanying guidelines have been issued by PFRDA under the powers vested in it by Section 14 of the Pension Fund Regulatory and Development Authority Act, 2013. The framework will become operative from the date formally notified by PFRDA, subject to the completion of requisite system upgrades and operational infrastructure.
Important Note: These guidelines are issued under
Section 14of the Pension Fund Regulatory and Development Authority Act, 2013, and will apply to all NPS stakeholders, including both Government and Non-Government Subscribers.
What Is the Core Objective of RIS and Drawdown Options?
The overarching goal of the RIS framework is to bring greater predictability of cash flows and longevity of the retirement corpus for NPS subscribers during their decumulation (payout) phase. Traditionally, subscribers exiting the NPS system either purchased an annuity or opted for phased withdrawals in a relatively rigid manner. The new framework addresses the gap by:
- Providing structured periodic payout mechanisms through market-linked life cycle funds
- Reducing the risk of the corpus being depleted before the end of the drawdown period
- Supporting sustained corpus appreciation even while payouts are being disbursed
- Offering subscribers a meaningful choice between different drawdown methodologies
A critical feature of the RIS framework is that drawdown withdrawals will not disturb the mandatory annuitisation requirement — whether 20% or 40% of the corpus, depending on the subscriber's category. This ensures that the minimum lifelong pension obligation under NPS regulation remains fully preserved.
Who Is Eligible?
The drawdown options and RIS are available to:
- Government Subscribers under NPS
- Non-Government Subscribers (NGS) under NPS
Eligible subscribers can opt to receive payouts on a monthly, quarterly, or annual basis, up to a maximum age of 85 years, or as per the specific choice exercised by the subscriber at the time of exit from NPS.
Retirement Income Schemes (RIS): Structure and Asset Allocation
RIS Steady — The Glide Path Approach
The only variant currently available under the RIS umbrella is the RIS Steady scheme. This scheme employs a gradual, annual glide path that progressively reduces the subscriber's exposure to equity (Asset Class E) as they advance in age, thereby managing investment risk in alignment with the subscriber's life stage.
- Equity allocation begins at 35% at age 60
- It decreases steadily each year
- Equity reaches a floor of 10% at age 75, after which it remains constant through age 85
- As equity reduces, the allocation to Asset Class G (Government Securities) correspondingly increases