PFRDA Forms Expert Committee to Develop Framework for Assured Payouts under NPS

The Pension Fund Regulatory and Development Authority (PFRDA) has announced the formation of an expert committee to develop a framework for assured payouts under the National Pension System (NPS).  

This initiative aims to bolster the security of retirement income for subscribers, aligning with the PFRDA Act. 

Committee Leadership and Composition 

Chaired by Dr. M. S. Sahoo, the committee comprises 15 experts from diverse fields such as legal, actuarial, finance, insurance, capital markets, and academia. The committee can also invite external experts for additional insights and consultation. 

Key Objectives and Terms of Reference 

The committee's primary mandate includes developing regulations for assured payouts, exploring pension schemes as highlighted in the PFRDA consultation paper dated September 30, 2025. It aims to ensure a seamless transition for subscribers from the accumulation phase to the decumulation phase. 

Market-based assurance is another focus, with deliberations on novation and settlement concepts to provide legally enforceable guarantees. The operational design will define terms such as lock-in periods, withdrawal limits, pricing mechanisms, and fee structures for providers. 

Risk and Legal Oversight 

The committee will establish robust risk management protocols, including capital and solvency requirements, and examine tax implications for payouts that do not require a subscriber to exit the NPS architecture. 

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Consumer Protection 

To prevent mis-selling and manage subscriber expectations, the committee will develop standardised disclosure frameworks. This will ensure clarity regarding the nature of assurance and market-based guarantees. 

Conclusion 

The formation of this expert committee by PFRDA marks a significant step towards enhancing the security of retirement income for NPS subscribers. By focusing on assured payouts and comprehensive risk management, the initiative aims to provide a robust framework for pension security. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

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