NPS Retirement Income Schemes (RIS) & Drawdown Options Explained
PFRDA's new Retirement Income Schemes (RIS) and SPR/SUR drawdown options let NPS subscribers receive flexible monthly, quarterly or annual payouts up to age 85 — without touching the mandatory annuity portion. Here's how it works.
If you have built your retirement corpus through NPS, one question has always loomed large at age 60 — what now? For years, the answer was binary: take 60% as a lumpsum, buy an annuity with the remaining 40%, and hope the math works out. PFRDA has just opened a third door.
Through Circular PFRDA/2026/31/MWnR/01 dated 15 May 2026, the Pension Fund Regulatory and Development Authority has introduced Retirement Income Schemes (RIS) and two formal drawdown options for the decumulation phase of NPS. This is a significant shift in how Indian retirees can manage their pension wealth — moving from a lumpsum-plus-annuity model to a flexible, market-linked payout structure that can run up to age 85.
Importantly, this does not dilute the mandatory annuity floor. It adds a new layer of flexibility on top of it.
What Are Retirement Income Schemes (RIS)?
RIS is a new life cycle fund specifically designed for the payout (decumulation) phase of NPS. Instead of pulling out your entire eligible lumpsum at exit, you can choose to park it in RIS and receive periodic payouts up to age 85.
The first variant available is RIS Steady, which uses a continuously declining annual glide path:
- Equity exposure reduces from 35% at age 60 to a floor of 10% at age 75, then held constant till age 85
- Corporate bonds (Asset Class C) play a stabilising role, peaking around 20% in the early 70s
- Government bonds (Asset Class G) progressively dominate, rising from 55% at age 60 to 75% by age 80
The objective is twofold: cashflow predictability through age-appropriate de-risking, and corpus longevity so that you do not run out of money before age 85.
RIS Steady — Asset Class Glide Path
| Age Bracket | Asset Class E (Equity) | Asset Class C (Corporate Bonds) | Asset Class G (Govt Bonds) |
|---|---|---|---|
| Up to 60 | 35% | 10% | 55% |
| 65 | 25% | 15% | 60% |
| 70 | 15% | 20% | 65% |
| 75 | 10% | 20% | 70% |
| 80 and above | 10% | 15% | 75% |
(Source: PFRDA Circular dated 15 May 2026 — Table I)
The Two Drawdown Options: SPR and SUR
Once you exit NPS, you receive periodic payouts from the lumpsum portion of your accumulated pension wealth through one of two drawdown options, chosen at the time of pension account closure:
a) Systematic Payout Rate (SPR) — Default Option
Under SPR, your payout is a percentage of the prevailing market value of your drawdown corpus, recalculated annually. The formula is elegantly simple:
SPR at Current Age = 1 ÷ (Drawdown End Age − Current Age) %
So for a subscriber exiting at age 60 with a drawdown end age of 85, here’s how the payout rate evolves:
| Age | Payout Rate |
|---|---|
| 60 | 4.00% |
| 65 | 5.00% |
| 70 | 6.67% |
| 75 | 10.00% |
| 80 | 20.00% |
| 84 | 100.00% |
The payout amount is then calculated as: SP = (SPR ÷ n) × Drawdown Corpus, where n is the periodicity (12 for monthly, 4 for quarterly, 1 for annual).
The payout rate and the resulting amount are reset every year on the subscriber’s birthday, based on the prevailing market value of the corpus.
b) Systematic Unit Redemption (SUR) — Equal Units
Under SUR, instead of a percentage, a fixed number of units is redeemed every payout cycle. The total units at start are divided equally over the drawdown period and payout frequency:
Units per period = Total units at start ÷ (Drawdown Period × Payout Frequency)
PFRDA’s illustration: a corpus of ₹80 lakhs at NAV ₹10 = 8,00,000 units. Drawdown period 25 years, monthly frequency.
Units redeemed per month = 8,00,000 ÷ (25 × 12) = 2,666.67 units/month
The number of units is fixed, but the rupee value you receive each month depends on the prevailing NAV — so SUR offers predictability in units but market-linked rupee payouts.
SPR vs SUR — Quick Comparison
| Feature | SPR (Default) | SUR Equal Units |
|---|---|---|
| Basis of payout | % of market value of corpus | Fixed number of units |
| Annual reset | Yes, on birthday | No, fixed at start |
| Rupee payout predictability | Lower (linked to corpus value) | Lower (linked to NAV) |
| Risk of early corpus exhaustion | Low — payout rate adjusts | Higher if NAV stays low |
| Residual corpus at end | Possible — choice of lumpsum or annuity | Negligible — units fully drawn down |
Neither option offers guaranteed returns. Both are market-linked and subject to the performance of the underlying RIS asset allocation.
What Stays Unchanged: The Annuity Floor
This is the most important point for subscribers to internalise: the mandatory annuitisation requirement is not affected.
- At superannuation (age 60), the existing rule of 40% annuity for the regular exit remains intact
- For partial/premature exits where 80% annuity applies, that too is preserved
- RIS and the drawdown options operate only on the lumpsum portion of your pension wealth
The annuity is your guaranteed life-long income floor. RIS sits on top of it, giving you a market-linked, flexible income stream from the lumpsum component — instead of the all-or-nothing lumpsum withdrawal you have today.
Eligibility, Flexibility & Other Key Details
Drawing from PFRDA’s specific guidelines:
- Eligibility: Both Government and Non-Government Subscribers (NGS) under NPS, who want systematic payouts up to age 85
- Payout frequency: Monthly, quarterly, or annually — subscriber’s choice
- Start of payouts: From the month following successful processing of the drawdown request
- Pension fund flexibility: You can continue with your existing pension fund, and switch your Pension Fund once in every two financial years
- Asset rebalancing: Happens on the subscriber’s date of birth, based on prevailing market value
- In the event of demise: Remaining balance is paid as per the PFRDA (Exits and Withdrawals under NPS) Regulations, 2015, as amended
- Charges: As per the existing framework applicable to such schemes
Residual Corpus Under SPR: Two Choices
Because SPR pays out a percentage of corpus rather than fully redeeming units, some residual corpus may remain at the end of the drawdown period. The subscriber has two choices:
- Withdraw the entire residual corpus as a lumpsum
- Combine the residual corpus with the deferred annuity component (if applicable) to purchase an annuity, in line with the PFRDA (Exits and Withdrawals under NPS) (Amendment) Regulations, 2025
This residual corpus feature is essentially a built-in margin of safety against longevity risk beyond 85.
Mandatory Disclosures: What Your Pension Fund Must Tell You
PFRDA has built in strong investor protection through mandatory disclosures. Pension Funds (PFs), Central Record Keeping Agencies (CRAs), and other intermediaries must clearly provide:
- A no-guarantee clause on the periodic payouts
- An explicit statement that payouts are subject to market risk
- A calculator or simulator on the website showing benefits and residual corpus projections
- A separate Retirement Income Statement (distinct from Tier I/II statements), containing:
- Reset Notification for SPR subscribers on every birthday — showing prevailing market value and the new age-based payout rate
- Asset Rebalancing Summary showing the shift in E, C, G allocations as per the RIS Steady glide path
This level of disclosure is a meaningful step up in investor protection for the decumulation phase.
How Does This Compare to Annuity?
| Feature | Annuity (Existing) | RIS + Drawdown (New) |
|---|---|---|
| Income certainty | Guaranteed for life | Market-linked, no guarantee |
| Duration | Lifetime | Up to age 85 |
| Returns potential | Lower (fixed) | Potentially higher (market-linked) |
| Flexibility | Very limited | High — frequency, fund switch, residual choice |
| Inflation hedge | Weak | Better (equity component) |
| Longevity risk beyond 85 | Covered | Not covered (need annuity for residual) |
| Mandatory portion | 40% at superannuation | Optional, on lumpsum portion only |
For most subscribers, the answer will not be “annuity or drawdown” but annuity plus drawdown — using each instrument for what it does best.
When Will RIS Go Live?
This is critical: the circular itself says the guidelines shall take effect from the date notified by the Authority, following implementation of the necessary system capabilities and operational framework.
In plain terms — the framework is announced, but subscribers cannot opt for RIS or the drawdown options just yet. You’ll need to wait for:
- An official “go-live” notification from PFRDA
- System readiness from your CRA (Protean, KFin, or CAMS)
- Pension Fund Managers operationalising the RIS Steady scheme
Until then, the existing exit and withdrawal rules continue to apply. We recommend you bookmark this development and revisit your retirement plan once the implementation date is announced.
Who Should Consider RIS When It Goes Live?
While the final choice depends on individual circumstances, RIS and drawdown options may particularly suit:
- Subscribers expecting longevity beyond 80, who want their corpus to keep growing
- Those with other guaranteed income sources (PPF maturity, family pension, rental income) who can afford some market-linked variability
- Subscribers wanting flexibility to switch pension funds or alter payout frequency
- HNI/NRI subscribers who want to layer NPS lumpsum proceeds into a structured income plan alongside other investments
Subscribers who prefer absolute income certainty and have limited risk tolerance may still lean towards higher annuity allocation. There is no one-size-fits-all answer.
Key Takeaways
- PFRDA Circular PFRDA/2026/31/MWnR/01 dated 15 May 2026 introduces RIS and two drawdown options under NPS
- Mandatory annuitisation of 20%/40% is preserved — RIS operates only on the lumpsum portion
- RIS Steady uses a glide path: equity falls from 35% (age 60) to 10% (age 75 onwards)
- Two drawdown options: SPR (default, percentage-based, annual reset) and SUR Equal Units (fixed-unit redemption)
- Payouts available up to age 85; frequency can be monthly, quarterly, or annual
- No guarantee on payouts — they are subject to market risk
- Pension fund can be switched once every two financial years
- The guidelines will go live only after PFRDA notifies the implementation date — not active yet
How Meta Investment Can Help
NPS is a long-haul retirement vehicle, and the decumulation strategy is arguably more important than the accumulation one. The wrong drawdown choice can erode decades of disciplined contribution.
At Meta Investment, we help subscribers in Pune and across India (including NRIs) plan their NPS exit holistically — looking at:
- Optimal split between mandatory annuity and lumpsum
- Choice between SPR and SUR based on cashflow needs and risk profile
- Integration with mutual funds, debt instruments, and other retirement assets
- Tax-efficient withdrawal sequencing
When RIS goes live, we’ll guide you through the actual onboarding process — including KYC, scheme selection, and reset notification reviews.
📞 Plan Your NPS Exit with Confidence
📧 Email: info@metainvestment.in 📞 Phone/WhatsApp: +919309806281 📍 Address: A3/204 मिरचंदानी पाम्स, कोकणे चौक, आकाशगंगा रोड, रहाटणी, पुणे 411017
Interested in Investing? Connect with Meta Investment
Meta Investment is a financial product distribution and services firm. If you'd like to explore whether a financial product is the right fit for your portfolio, our team will walk you through the details, help you assess suitability, and guide you through the onboarding process.
NPS investments and the new RIS/drawdown options are subject to market risks. There is no guarantee or assurance on periodic payouts under SPR or SUR. Read all scheme-related documents and PFRDA circulars carefully. Past performance of pension funds may or may not be sustained in the future. Investors should consult a SEBI/AMFI-registered financial advisor or their NPS distributor before making decisions on exit and drawdown options.
Source: PFRDA Circular No. PFRDA/2026/31/MWnR/01 dated 15 May 2026 and accompanying Guidelines and Annexures A & B. Implementation date to be notified by PFRDA.
Meta Investment – Your Investment, Insurance & Retirement Planning Companion.
Frequently Asked Questions
What are the new Retirement Income Schemes (RIS) under NPS?
Retirement Income Schemes (RIS) are a new life cycle fund introduced by PFRDA for the decumulation (payout) phase of NPS. Instead of taking the entire lumpsum portion of your corpus at exit, you can park it in RIS and receive periodic payouts up to age 85. The first variant — RIS Steady — uses a declining glide path that reduces equity exposure from 35% at age 60 to 10% at age 75, then holds it steady till age 85.
Which PFRDA circular introduced RIS and drawdown options under NPS?
PFRDA introduced these via Circular No. PFRDA/2026/31/MWnR/01 dated 15 May 2026. It builds on the framework laid down by earlier circulars (November 2016, October 2023, and October 2024) and operationalises the PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025. The guidelines will take effect from a date notified by the Authority after the necessary system capabilities are in place.
Do RIS and drawdown options replace the mandatory annuity requirement under NPS?
No. The mandatory annuitisation requirement of 20% (for partial withdrawal scenarios) or 40% (at superannuation for the regular exit) of the corpus remains untouched. RIS and the drawdown options operate only on the lumpsum portion of your accumulated pension wealth. The minimum statutory requirement for a life-long pension via annuity is preserved.
Who is eligible for the new NPS drawdown options?
Both Government and Non-Government Subscribers (NGS) under NPS who wish to receive systematic payouts from their designated pension corpus up to a maximum age of 85 years are eligible. The choice of drawdown option is made at the time of closure of the pension account, after which fresh contributions stop.
What are the two drawdown options available — SPR and SUR?
Subscribers can choose between two methods: (a) Systematic Payout Rate (SPR), which is the default option — your payout is calculated as a percentage of the prevailing market value of your drawdown corpus on every birthday; and (b) Systematic Unit Redemption (SUR) — Equal Units, where a fixed number of units is redeemed each payout cycle over the chosen drawdown period.
How is the Systematic Payout Rate (SPR) calculated?
SPR uses a simple formula: SPR at Current Age = 1 / (Drawdown End Age − Current Age) %. So if you are 60 and your drawdown end age is 85, your SPR is 1/25 = 4.00% of the corpus for that year. At age 65, it rises to 1/20 = 5.00%. The rate is reset every birthday based on the prevailing market value of the corpus and the new age-based payout rate.
What is the SUR Equal Units method and how does it work?
Under SUR Equal Units, your total unit balance at the start of drawdown is divided equally over the chosen drawdown period and payout frequency. The formula is: Number of units per period = Total units at start ÷ (Drawdown Period × Payout Frequency). For example, 8,00,000 units over a 25-year drawdown with monthly payouts = 8,00,000 ÷ (25 × 12) = 2,666.67 units redeemed every month.
How does the RIS Steady glide path allocate assets across age brackets?
RIS Steady follows a declining equity glide path: Asset Class E (equity) is 35% at age 60, falling by 2% each year to 25% at age 65, 15% at age 70, and 10% from age 75 onwards (held till age 85). Asset Class G (government bonds) rises from 55% at age 60 to 75% at age 80 and above. Asset Class C (corporate bonds) plays a stabilising middle role, peaking around 20% in the early 70s.
Can I switch my pension fund manager during the drawdown phase?
Yes. Subscribers opting for the drawdown options have the option to continue with their existing pension fund, and can switch their Pension Fund once in every two financial years. This provides flexibility to respond to changing fund performance or preferences over the long payout horizon.
What happens to the corpus if I pass away during the drawdown phase?
If a subscriber using the drawdown facility passes away during the payout phase, the remaining balance in the account — after accounting for any scheduled payments already made — will be paid as per the PFRDA (Exits and Withdrawals under NPS) Regulations, 2015, as amended from time to time. The nominee/legal heir process under existing NPS rules applies.
How frequently are payouts made under the drawdown options?
Subscribers can elect to receive periodic payouts on a monthly, quarterly, or annual basis. Upon successful processing of the drawdown request, periodic payouts shall be initiated from the following month. For SPR subscribers, both the payout rate and the resulting payout amount are reset annually on the subscriber's birthday, based on the prevailing market value of the drawdown corpus.
What is residual corpus and what are my choices for it at the end of the drawdown period?
Under the SPR option, since payouts are a percentage of the corpus and not a fixed unit redemption, some residual corpus may remain at the end of the drawdown period. The subscriber has two choices: (a) withdraw the entire residual corpus as a lumpsum, or (b) combine the residual corpus with the annuity component (if deferred) to purchase an annuity in line with PFRDA Regulations.
Are payouts under RIS and drawdown options guaranteed?
No. PFRDA has made it explicit that there is no guarantee or assurance clause in respect of the periodic payouts. The payouts are subject to market risk, since they are derived from a market-linked corpus invested across asset classes E (equity), C (corporate bonds), and G (government bonds). Pension Funds and CRAs are required to provide detailed disclosures including a benefits illustration and residual corpus projection.
When will RIS and the new drawdown options actually go live?
The guidelines will take effect from the date notified by PFRDA, following the implementation of necessary system capabilities and the operational framework. The circular was issued on 15 May 2026, but subscribers should wait for an official go-live notification from PFRDA and their CRA (Protean, KFin, or CAMS) before they can actually opt in. Until then, existing exit rules continue to apply.
Should I choose annuity, SPR, or SUR for my retirement income?
There is no single right answer — it depends on your longevity expectations, other income sources, risk appetite, and need for flexibility. Annuity offers guaranteed life-long income but limited flexibility. SPR offers market-linked, potentially higher payouts with annual reset but no guarantee. SUR offers predictable unit redemption but the rupee value varies with NAV. Most subscribers may want to combine: the mandatory 40% annuity for guaranteed floor income, and the remaining 60% in RIS with SPR or SUR for growth and flexibility. Consult your financial advisor before deciding.
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