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Informist, Friday, May 15, 2026

 

NEW DELHI – The Pension Fund Regulatory and Development Authority Friday announced the introduction of retirement income schemes and drawdown options under the National Pension System to provide more flexible periodic payout options during subscribers' decumulation, or payout, phase while continuing to support corpus appreciation through the schemes. Subscribers will be allowed to receive payouts on a periodical basis, like monthly, quarterly or annually, for a period up to 85 years of age, or as per the choice exercised by the subscriber, at the time of their exit from NPS.

 

Under the retirement income schemes, subscribers will be 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, ensuring that the minimum statutory requirement for a life-long pension remains intact. These drawdown options will be available to government and non-government subscribers under NPS.

 

"The primary objective is to optimise periodic payouts for subscribers during the decumulation (payout) phase through drawdown options via the specific life cycle fund for the decumulation under NPS," PFRDA said in a release. "It aims to enhance cashflow predictability and corpus longevity through continued support to corpus appreciation, thus minimising the risk of early corpus exhaustion before the end of the drawdown period," it added. 

 

Under the retirement income scheme, asset distribution will follow a continuously declining annual glide path that reduces equity exposure from 35% at age 60 to a floor of 10% at age 75, held constant thereafter until age 85. The choice of the drawdown option will be made by the subscriber at the time of closure of a pension account, after which fresh contributions will stop.

 

The two drawdown options are the systematic payout rate, which is also the default option, and the systematic unit redemption plan. The systematic payout rate will be dependent on the drawdown end age and the current age of the subscriber, while under the unit redemption plan, the total unit balance is liquidated in equal instalments over the selected drawdown period, PFRDA said.

 

Subscribers opting for either of the drawdown options will also have the option of continuing with their existing pension fund and the option to switch their pension fund once every two financial years, the pension regulator said. 

 

Pension fund managers handle the pension fund corpus under the National Pension System. Currently, 10 pension fund managers operate under PFRDA--LIC Pension Fund Ltd., SBI Pension Funds Pvt. Ltd., UTI Pension Fund Ltd., HDFC Pension Fund Management Ltd., ICICI Prudential Pension Funds Management Co. Ltd., Kotak Mahindra Pension Fund Ltd., Aditya Birla Sun Life Pension Fund Management Ltd., Tata Pension Fund Management Pvt. Ltd., Axis Pension Fund Management Ltd., and DSP Pension Fund Managers Pvt. Ltd. Together, they manage a pension corpus of INR 16.5 trillion.

 

According to the regulator, if a subscriber using the drawdown facility passes away during the payout phase, the remaining balance in their account, after accounting for any scheduled payments already made, will be paid in accordance with the PFRDA (Exits and Withdrawals under the National Pension System) Regulations, 2015, as amended from time to time.  End

 

Reported by Priyasmita Dutta

Edited by Avishek Dutta

 

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