New Delhi, May 18 (IANS) Pension Fund Regulatory and Development Authority (PFRDA) has unveiled a major overhaul of post‑retirement options under India’s National Pension System (NPS), allowing retirees to take periodic payouts from the withdrawable portion of their corpus.

The new framework introduces a drawdown facility that lets subscribers opt for monthly, quarterly or annual payouts from the lump‑sum portion retained under NPS.

These withdrawals will run alongside the mandatory annuity income already provided under the pension system.

The pension regulator said the newly launched Retirement Income Schemes (RIS) aims to improve “cashflow predictability during the retirement phase and corpus longevity of the subscriber”.

Until now, most NPS subscribers at retirement could withdraw up to 60 per cent of their corpus tax-free as a lump sum and were required to use at least 40 per cent to purchase an annuity.

Under the new framework, retirees can choose phased withdrawals from the lump sum component, similar to the systematic withdrawal plan (SWP) in mutual funds.

If the subscriber’s remaining corpus after annuity purchase can stay invested instead of being withdrawn immediately, it may fetch better long-term returns and help retirees maintain inflation-adjusted cash flows.

The new facility “shall have no impact on the mandatory annuitisation requirement of 20 per cent or 40 per cent of the corpus,” PFRDA clarified.

The regulator also clarified that there is “no guarantee or assurance of fixed payout” for the subscribers under the drawdown framework because the money remains exposed to market-linked investments.

Under the “RIS Steady” model, equity exposure will gradually decline from 35% at age 60 to 10 per cent by age 75 and remain at that level until age 85. The regulator noted that “gliding path equity participation may ensure a higher growth of the corpus” by balancing growth and risk while enabling periodic payouts.

Subscribers choosing the drawdown option will be able to select between two payout methods such as a Systematic Payout Rate (SPR) and Systematic Unit Redemption (SUR).

In the Systematic Payout Rate (SPR) method, payouts depend on the subscriber’s current age and chosen drawdown end age and adjust over time to preserve the corpus.

The Systematic Unit Redemption (SUR) mode of payment redeems a fixed number of units periodically.

—IANS

aar/ag