NPS Introduces Flexible Retirement Payout Schemes Allowing Withdrawals Up to Age 85

The Pension Fund Regulatory and Development Authority (PFRDA) has unveiled new flexible retirement payout schemes under the National Pension System (NPS), allowing subscribers greater freedom in managing post-retirement funds while adhering to existing annuity requirements. 

NPS Offers Phased Withdrawals and New Lifecycle Fund 

As per the guidelines released by PFRDA, the new options under NPS include phased withdrawals from the pension corpus, facilitating periodic payouts.  

Subscribers can now choose between monthly, quarterly, or annual disbursements up to age 85. This approach aims to provide financial flexibility during the retirement phase while sustaining corpus growth. 

Payouts are structured so that they do not undermine the mandatory annuity purchase requirement, either 20% or 40% of the corpus, depending on specific NPS exit rules. This ensures subscribers receive lifelong pension income. 

Launch of “RIS Steady (Balanced)” Lifecycle Fund 

The PFRDA has also introduced a new lifecycle fund, “RIS Steady (Balanced),” under the Retirement Income Schemes category.  

This fund adopts a declining equity allocation model, reducing equity exposure from 35% at age 60 to 10% by age 75, maintaining this ratio until age 85.  

Government securities exposure increases with the subscriber's age, and adjustments to corporate bond allocations occur gradually. 

Read More: PFRDA Eases NPS Annuity Surrender Rules to Allow Exit in Select Cases! 

Scheme Availability Across Sectors 

Both government and non-government subscribers under NPS can access these flexible retirement payout options.  

They can choose their desired payout structure at the time of pension system exit, enabling comprehensive management of their retirement resources. 

Implementation and Future Announcements 

The PFRDA has stated that the guidelines for these new initiatives will be implemented from a date to be announced once the necessary operational frameworks are ready. 

Conclusion 

The introduction of these schemes underlines the PFRDA’s commitment to enhancing subscriber flexibility and security in retirement planning. By maintaining the mandatory annuity purchase, the regulatory body ensures a reliable pension income for subscribers. 

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