PFRDA Launches New Pension Plan, Regular Income Up to Age 85..

The Pension Fund Regulatory and Development Authority (PFRDA) has provided significant relief to the millions of investors associated with the National Pension System (NPS). Now, the process of receiving a pension after retirement will become easier and more flexible than ever before. The regulator has launched a Retirement Income Scheme (RIS) along with new drawdown options, enabling subscribers to withdraw funds in a phased manner, tailored to their specific needs. According to a circular issued on May 15, 2026, the objective of this new system is to ensure a regular income stream post-retirement and to grant investors greater control over their funds.

**RIS Steady: A New Approach to Secure Post-Retirement Investment**
The PFRDA has also introduced a new fund option named 'RIS Steady.' This option has been specifically designed with post-retirement requirements in mind. Under this scheme, equity exposure will automatically decrease as the subscriber ages, thereby mitigating the impact of market volatility and ensuring the continued safety of the investment.

At the age of 60, approximately 35% of the fund's corpus will be invested in equities, 10% in corporate bonds, and 55% in government securities. By the age of 75, however, the equity allocation will have reduced to a mere 10%.

**Two New Ways to Withdraw Funds**
The PFRDA has introduced two new drawdown options for subscribers. The first is the **Systematic Payout Rate (SPR)**, which will serve as the default option. Under this method, the annual withdrawal amount is determined based on the subscriber's age and a defined payout period extending up to the age of 85. As the subscriber ages, the payout rate will progressively increase.

For instance, if an individual initiates payouts at the age of 60, they will be able to withdraw approximately 4% of their corpus annually. By the age of 70, this rate will have risen to approximately 6.67%.

The second option is **Systematic Unit Redemption (SUR)**. Under this method, the total number of units held is distributed evenly across the entire payout period. An equal number of units will be redeemed each month; however, the actual monetary value received will fluctuate based on the prevailing Net Asset Value (NAV) at the time of redemption.

**No Changes to Annuity Regulations**
The PFRDA has clarified that these new options will not impact the mandatory annuity regulations currently applicable to the NPS. In other words, under the current regulations, it will be mandatory to invest 20% or 40% of the corpus in an annuity so that the investor continues to receive a pension for life.

**Market Risk Will Also Apply**
The regulator has directed pension funds and CRAs to clearly inform investors that there will be no guarantee on payouts, and that such payouts will be subject to market risk. Additionally, subscribers will be provided with periodic updates regarding corpus projections, payout details, and asset rebalancing.

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