NPS Update: Three new options are coming to NPS, guaranteeing pension! Learn the full update..

Regular and secure income after retirement is a top concern for everyone, especially when it comes to utilizing lifelong earnings and savings. In this context, the National Pension System (NPS) has become a reliable option. Now, the Pension Fund Regulatory and Development Authority (PFRDA) has taken a major step towards making it more flexible and effective.

The PFRDA has released a consultation paper titled "Enhancing the National Pension System." It proposes three new schemes aimed at providing pensioners with greater security, stability, and options. The public, experts, and institutions can submit their comments on this paper by October 31, 2025.

Major Changes to the NPS

This paper outlines three new schemes under the NPS. Each scheme has been designed to meet different needs.

Scheme 1: Non-Assured, Flexible Decumulation

This scheme provides investors with flexibility. Withdrawal options will be through a mix of Systematic Withdrawal Plan (SWP) and annuity. Its objective is to maximize pension wealth.

Scheme 2: Target Pension
This scheme provides a guaranteed pension. The pension will be periodically adjusted for inflation, using the Consumer Price Index for Industrial Workers (CPI-IW).

Scheme 3: Pension Credits
This is a new concept. Each pension credit will provide a fixed monthly pension. This will provide predictability and trust to pensioners. It will operate on a goal-based framework.

Why is this change necessary?
A large population in India desires a stable and assured income after retirement. The current NPS offers flexibility, but the guarantees are not as strong. This is why many people remain dissatisfied with annuity returns after retirement.

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