Abstract: NPS simply added a 3rd retirement choice that did not exist earlier than. It is not an annuity. It is not a lumpsum. And for the precise subscriber, it solves the issue that neither of these ever may.
For 17 years, NPS subscribers retiring at 60 had two doorways. Take the 60 per cent lumpsum in money. Or purchase an annuity at 6 or 7 per cent for all times, with nothing left for the household. Most selected the primary. Most discovered a 25-year retirement on a single cheque more durable than anticipated.
On 15 Could 2026, the Pension Fund Regulatory and Growth Authority (PFRDA) opened a 3rd door.
The Retirement Earnings Scheme (RIS) allows you to go away the 60 per cent lumpsum inside NPS, invested in a devoted lifecycle fund known as RIS Regular, and draw it down in month-to-month, quarterly or annual instalments till age 85. The asset combine glides from 35 per cent fairness at 60 to 10 per cent at 75, then holds at 10 per cent till 85. Rebalancing occurs on the subscriber’s birthday. The residual, if any, goes to the nominee. The obligatory 40 per cent annuity is untouched.
Two methods to attract the cash
Systematic Payout Charge (SPR) is the default. Charge-based, ruled by one method: payout price = 1 ÷ (85 − present age). The speed applies to the corpus worth on the subscriber’s birthday and locks for 12 months.
Age | Payout price |
| 60 | 4.0% |
| 65 | 5.0% |
| 70 | 6.7% |
| 75 | 10.0% |
| 80 | 20.0% |
| 82 | 33.3% |
| 83 | 50.0% |
| 84 | 100.0% |
Systematic Unit Redemption (SUR). Unit-based. The unit stability is split by whole payouts. A Rs 80 lakh corpus over 25 years, with month-to-month redemptions of two,666.67 items. The rupee worth strikes with the NAV.
SPR smooths the proportion. SUR smooths the unit depend. Each devour the corpus by the drawdown finish age.
The trade-off towards an annuity
A Rs 60 lakh corpus at a typical 6.5 per cent NPS annuity price pays Rs 32,500 a month for all times. The identical Rs 60 lakh in RIS on the 4 per cent beginning price pays Rs 20,000 a month, however the corpus continues to earn, the payout can rise, and the residual goes to the nominee. Annuity: larger, mounted, ends at dying. RIS: variable, rising, inheritable.
What can go flawed
PFRDA is express: no assure, market threat, and residual is unsure. Two additional factors: the round doesn’t flag. SPR back-loads aggressively; on the 100 per cent price, the 84 absolutely consumes the corpus by 85, leaving a subscriber who lives longer with solely the annuity earnings. And when you train a drawdown choice, recent NPS contributions cease. The corpus you begin with is the corpus you draw from.
Who it suits, and what to do
RIS suits subscribers who’ve a significant lumpsum (Rs 30 lakh and above), different regular earnings, a tolerance for variable payouts, and an curiosity in legacy. It doesn’t match subscribers whose solely retirement earnings is NPS, or who can’t reside with payouts that transfer with markets.
The operational date is but to be notified—anticipated within the subsequent few months. Whilst you wait: pull your NPS corpus from the CRA portal, examine annuity charges on the NPS Belief website, and be sincere about your tolerance for variability. The Indian NPS subscriber lastly has the toolkit that retirees in mature pension methods have had for years. For the precise subscriber, it solves the issue the annuity by no means may: how you can maintain the corpus working by retirement.
Additionally learn:
I opened an NPS for the tax break. How do I get out?
The way to revive your dormant NPS account
This text was initially revealed on Could 19, 2026.
