NPS withdrawal overhaul: How you can now plan flexible pension payouts till 85 — 2 methods explained

The Pension Fund Regulatory and Development Authority (PFRDA) has rolled out Retirement Income Schemes (RIS) and drawdown facilities under the National Pension System (NPS), enabling subscribers to withdraw their retirement corpus in phases after retirement while keeping the remaining funds invested.

The regulator said the aim is to provide subscribers with a “more flexible periodic payout options during their decumulation phase while continuing to support corpus appreciation through the retirement income schemes”

PFRDA circular, released on May 15, said “subscribers who opt for the facility will be allowed to receive payouts on a periodic basis — monthly, quarterly or annually — for up to 85 years of age, or as per the choice exercised by the subscriber when exiting NPS.”

Subscribers, invested under the RIS framework, will be able to withdraw their designated pension corpu in a phased manner through a drawdown option of their choice.

“Consequently, these withdrawals shall have no impact on the mandatory annuitisation requirement of 20% or 40% of the corpus, as the case may be, thus ensuring that the minimum statutory requirement for a life-long pension remains intact,” the circular read.

Here's a how the RIS withdrawal plan works:

Option One: Systematic Payout Rate (SPR) - Default

The withdrawal amount is determined based on your current age and the period over which you wish to continue withdrawals until the age of 85. For this, the formula that is followed: 1 ÷ (85 minus your current age) = your annual payout rate

Example at age 65: 1 ÷ (85-65) = 5% of corpus withdrawn annually

Example at age 70: 1 ÷ (85-70) = 6.67% of corpus withdrawn annually

Option Two: Systematic Unit Redemption (SUR)

Your total units are spread evenly over the entire drawdown tenure, with a fixed number of units redeemed each month regardless of changes in NAV.

For instance, if you hold 10,00,000 units and opt for monthly payouts over 25 years, around 3,333 units would be redeemed every month. However, payout amount would depend on the current NAV.

The drawdown options will be available to both government and non-government subscribers under NPS

PFRDA said the effective date for these guidelines will be announced once the necessary technical systems and operational frameworks are in place. The regulator noted that these guidelines were issued under the authority granted by Section 14 of the PFRDA Act, 2013. It said the initiative has been introduced in line with the PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025.

According to latest PFRDA data, the NPS had more than 21.7 million subscribers and more than ₹16 trillion in assets under management as of March 2026.