NPS Retirement Income Scheme : The Pension Fund Regulatory and Development Authority (PFRDA) has introduced a new Retirement Income Scheme (RIS) under the National Pension System (NPS). This scheme gives retirees another option for receiving their retirement savings. Earlier, subscribers could withdraw up to 60% of their NPS corpus in one lump sum and had to use the remaining amount to buy an annuity. With RIS, the 60% withdrawal amount can now be received in regular payments over time. This allows retirees to keep part of their money invested while also receiving a steady income after retirement.
Who Can Join the Scheme?
The RIS option is available to both government and private-sector NPS subscribers. People can choose to receive payments monthly, quarterly, or annually. These payments can continue until the age of 85. The annuity portion of NPS remains unchanged and still provides lifelong pension income. This means RIS only changes how the withdrawable part of the retirement corpus is paid out. It does not affect the pension received through the annuity plan.
How Is the Money Invested?
Under RIS, the remaining retirement corpus continues to stay invested. The investment plan automatically becomes safer as a person gets older. At age 60, 35% of the money can be invested in equities, while the rest is placed in bonds and government securities. As age increases, the equity share gradually decreases to reduce risk. At the same time, investment in government securities increases for better stability. These changes happen automatically every year.
RIS Investment Details at a Glance
| Age Group | Equity (E) | Corporate Bonds (C) | Government Securities (G) |
|---|---|---|---|
| 60 Years | 35% | 10% | 55% |
| 65 Years | 25% | 15% | 60% |
| 70 Years | 15% | 20% | 65% |
| 75 Years | 10% | 20% | 70% |
| 80 Years and Above | 10% | 15% | 75% |
Two Ways to Receive Payments
Subscribers can choose between Systematic Payout Rate (SPR) and Systematic Unit Redemption (SUR). SPR is the default option and calculates payments based on age and the remaining drawdown period. The payout amount is reviewed every year. SUR works differently by redeeming a fixed number of units at regular intervals. Since market prices change, the amount received under SUR may vary each time. SPR may leave some money remaining at the end, while SUR usually uses the entire corpus.
Benefits and Important Points
RIS offers flexibility and helps retirees receive regular income while keeping their savings invested. However, returns are linked to market performance and are not guaranteed. Before selecting this option, retirees should consider their financial needs and future expenses carefully. Those who need a large amount of money immediately after retirement may prefer the traditional lump-sum withdrawal. Consulting a financial expert can help in making the right choice.
Key Features of RIS
- Regular monthly, quarterly, or yearly income options
- Remaining corpus stays invested and can continue growing
- Available for government and non-government NPS subscribers
- Option to choose between SPR and SUR payout methods
- Pension fund manager can be changed once every two years
- Nominees receive the remaining balance if the subscriber passes away
- Lifetime annuity pension remains unaffected
Frequently Asked Questions (FAQs)
1. What is RIS?
RIS stands for Retirement Income Scheme, a new NPS drawdown option introduced by PFRDA.
2. Who can use RIS?
Both government and private-sector NPS subscribers are eligible.
3. Does RIS affect my annuity pension?
No. The annuity portion remains exactly the same.
4. Are RIS payments guaranteed?
No. Payments depend on market performance and investment returns.
5. Can I receive payments every month?
Yes. Monthly, quarterly, and annual payment options are available.
6. What happens if I die during the payout period?
The remaining corpus is transferred to the nominee or legal heir.
7. Can I change my pension fund manager?
Yes. You can switch your pension fund manager once every two financial years.
8. What happens to leftover money under SPR?
Any remaining amount can be withdrawn as a lump sum or used to purchase additional annuity income.
