NPS Retirement Income Scheme : The Pension Fund Regulatory and Development Authority (PFRDA) has introduced a new option called the Retirement Income Scheme (RIS) under the National Pension System (NPS). This scheme started in May 2026 and gives retirees more flexibility in using their retirement savings. Earlier, retirees could take up to 60% of their NPS money as a lump sum and had to use the remaining amount to buy an annuity for regular pension income. Now, RIS allows people to receive the 60% portion in regular installments instead of taking it all at once.
Who Can Use RIS?
Both government and private-sector NPS subscribers can choose this scheme when they retire. Under RIS, payouts can be received every month, every three months, or once a year. The payments can continue until the subscriber reaches the age of 85. The annuity part of NPS remains the same and is not affected by this new option. This means retirees will still receive their lifetime pension through the annuity plan they choose.
How Is the Money Invested?
Money left in the RIS account stays invested even after retirement. The investment strategy is designed to become safer as a person grows older. At age 60, around 35% of the money can be invested in equities (shares). Over time, the equity portion reduces while investments in government securities increase. This helps lower risk and protect retirement savings. The allocation changes automatically every year based on the retiree’s age.
RIS Investment Allocation Table
| Age | Equity (E) | Corporate Bonds (C) | Government Securities (G) |
|---|---|---|---|
| 60 | 35% | 10% | 55% |
| 65 | 25% | 15% | 60% |
| 70 | 15% | 20% | 65% |
| 75 | 10% | 20% | 70% |
| 80+ | 10% | 15% | 75% |
Two Ways to Receive Payments
RIS offers two payment methods. The first is Systematic Payout Rate (SPR), which is the default option. Under this method, the payout amount is calculated every year based on age and remaining drawdown period. The second method is Systematic Unit Redemption (SUR). In this option, a fixed number of investment units are redeemed regularly. The amount received can go up or down depending on market performance and the current value of the units.
Benefits and Things to Remember
RIS can be a useful option for retirees who do not need a large amount of money immediately after retirement. Since the money remains invested, it can continue to grow over time. However, returns are linked to market performance, so payments are not guaranteed. Retirees should carefully consider their future expenses and financial needs before choosing this option. Speaking with a financial advisor can help in making the right decision.
Collector-Style Tips Important Features of RIS
- Money continues earning returns after retirement.
- Monthly, quarterly, or yearly payouts are available.
- The annuity pension remains unchanged.
- Investment risk reduces automatically with age.
- Pension fund manager can be changed once every two financial years.
- Nominees receive the remaining balance if the subscriber dies during the payout period.
Frequently Asked Questions (FAQs)
1. What does RIS stand for?
RIS stands for Retirement Income Scheme, a new NPS drawdown option introduced by PFRDA.
2. Does RIS replace the NPS annuity?
No. The annuity requirement remains exactly the same.
3. Who can join RIS?
Both government and non-government NPS subscribers can choose RIS at retirement.
4. Are RIS payouts guaranteed?
No. Payments depend on market performance and investment returns.
5. What happens if a subscriber dies during the payout period?
The remaining balance is transferred to the nominee or legal heir.
6. Can I change my pension fund manager?
Yes. Subscribers can switch pension fund managers once every two financial years.
7. What happens to leftover money at age 85 under SPR?
Any remaining balance can be withdrawn as a lump sum or used to buy additional annuity income.
8. Can I receive payments every month?
Yes. Monthly, quarterly, and annual payout options are available.
