NPS Retirement Income Scheme Explained: What It Means for You

What Is the NPS Retirement Income Scheme?

The NPS Retirement Income Scheme is a new post-retirement investment option. It is designed for the NPS decumulation phase in India, which means the period after retirement when a subscriber stops saving and starts using their corpus.

Under RIS, instead of withdrawing the entire lump sum on retirement day, the subscriber keeps it invested in a dedicated fund called RIS Steady. The money then pays out in regular instalments over time. Key points to know:

• RIS applies only to the lump sum portion of the corpus, not the mandatory annuity portion
• The mandatory annuity requirement of 20% (non-government) or 40% (government) remains unchanged
• Payouts can be monthly, quarterly, half-yearly, or annual
• The corpus earns market-linked returns while it stays invested
• Both government and non-government subscribers can use RIS
• The drawdown period runs from the retirement age up to age 85

RIS is similar to a Systematic Withdrawal Plan (SWP) in mutual funds. The key difference is that it sits within the NPS structure and follows PFRDA rules.

How NPS RIS Works: The Decumulation Phase

The NPS decumulation phase in India begins when the subscriber exits NPS. Here is how the overall process works after retirement.

Step 1: At retirement, the subscriber separates the corpus into two parts:

• Mandatory annuity portion (20% or 40%, as applicable)
• Lump sum portion (the remaining 60% or 80%)

Step 2: The mandatory annuity portion is used to purchase a pension plan from a PFRDA-empanelled insurer.

Step 3: The lump sum portion can now go into:

• Full withdrawal in one go (old option, still available)
• Partial or full investment in RIS for NPS phased withdrawal (new option)

Step 4: Under RIS, the subscriber picks one of two payout methods, SPR or SUR, and a payout frequency.

Step 5: Payouts are received regularly during the selected drawdown period, which can continue up to age 85.

PFRDA has confirmed that withdrawals under RIS have no impact on the annuity requirement. Subscribers will also receive a Retirement Income Statement tracking annual resets and fund rebalancing.

RIS Steady: How Your Money Is Invested Inside RIS

The fund used within the NPS Retirement Income Scheme is called RIS Steady. It is a lifecycle fund designed for retirees.

RIS Steady uses a declining equity strategy. RIS Steady follows a declining equity allocation strategy: when you are younger at retirement, some exposure to stocks helps grow the corpus. As you get older, the risk is reduced. The asset allocation under RIS Steady follows this path:

Equity allocation declines by about 2 % every year between the age of 60 and 75 and remains constant at 10 % afterward. The non-equity portion of the corpus is invested primarily in corporate bonds and government securities.

NPS Drawdown Options: SPR and SUR Explained

After the corpus is allocated to RIS, the subscriber can opt for one of the two NPS drawdown schemes:

• Systematic Payout Rate NPS is the default drawdown choice. The rate is determined every year depending on the subscriber's age and current market corpus value.
• Systematic Unit Redemption NPS is different. Instead of a percentage of corpus value, a fixed number of units is redeemed at each payout.

Note: Both SPR and SUR are market-linked. Neither provides a fixed or guaranteed income.

NPS Retirement Income Scheme: No Return Guarantee

This is the most important point about the NPS retirement income scheme: no return guarantee.

PFRDA has specifically stated that there is "no guarantee or assurance of fixed payout" under the RIS drawdown framework. The corpus stays invested in RIS Steady, which holds equity, bonds, and government securities. This means:

• If investment performance is favourable, the corpus value may increase and support higher future payouts
• If the market falls, the corpus shrinks, and payouts may be lower
• There is no floor amount guaranteed each month
• The drawdown structure is designed to distribute the remaining corpus over the period up to age 85

PFRDA has made it mandatory for Pension Funds and CRAs (Central Record Keeping Agencies) to clearly tell subscribers that payouts are market-linked before they choose this option.

NPS Withdrawal After 60

With RIS now added, here is a complete look at all NPS withdrawal after 60 options available as of May 2026.

Note: Rules are as per PFRDA regulations as of May 2026 and are subject to revision. Subscribers should verify current rules at pfrda.org.in before making exit decisions.

Who Can Start NPS RIS: Eligibility Criteria

Before opting for the NPS Retirement Income Scheme, the subscriber must meet these conditions.

1. For normal exit (RIS eligible):

   • Must be an active NPS Tier I subscriber
   • Age 60 or above, or on superannuation
   • Total corpus must be above ₹8 lakh; corpus at or below ₹8 lakh qualifies for 100% lump sum withdrawal without any annuity or RIS requirement

2. For government subscribers:

   • Must use minimum 40% of corpus for annuity purchase
   • Remaining 60% is eligible for RIS or lump sum withdrawal

3. For non-government subscribers:

   • Must use minimum 20% of corpus for annuity purchase
   • Remaining 80% is eligible for RIS or lump sum withdrawal

4. Account readiness before opting for RIS:

   • KYC details (Aadhaar, PAN, bank account) must be updated and verified in the NPS account
   • Bank account must be linked and verified via the penny drop facility in the CRA system
   • Nomination details must be registered

Note: Eligibility conditions are as per PFRDA Amendment Regulations 2025 and are subject to revision.

NPS RIS vs Annuity: Which Is Better

Both options address the same problem: how to get monthly income from NPS after retirement. But they work very differently. Here are the key features for both:

Documents Required for NPS Withdrawal and RIS Drawdown

The documents required are the same whether the subscriber opts for a lump sum withdrawal, annuity, or NPS phased withdrawal under RIS. All documents must be uploaded through the CRA system (Protean CRA or KFintech CRA) as part of the exit request.

Additional details required at the time of exit:

• Percentage split between lump sum and annuity
• Choice of Annuity Service Provider (ASP) and annuity scheme (if purchasing annuity)
• For RIS: selection of drawdown option (SPR or SUR) and payout frequency
• Marital status and spouse details (for joint life annuity, if applicable)
• Nominee details as registered in the NPS account

All documents must be legible. Bank account details are verified via an online penny drop facility.

Conclusion

The NPS Retirement Income Scheme fills a clear gap in India's retirement planning system. For years, NPS subscribers had to choose between a one-time lump sum or a fixed annuity at retirement. RIS adds a third path: keeping the corpus invested and receiving phased payouts through NPS drawdown options.

For subscribers who want flexibility, potential inflation-adjusted income, and are comfortable with some market risk, RIS with Systematic Payout Rate NPS is worth considering. For those who need certainty, annuity remains the safer choice.

Most subscribers will benefit from a combination: annuity for a fixed income floor and RIS for variable, growth-linked income on top. A qualified financial adviser can help determine the right split based on individual retirement needs.