NPS Retirement Income Scheme and drawdown, citizen guide 2026

Under the PFRDA circular dated 15 May 2026, you can now keep your NPS corpus invested at exit and draw a regular monthly, quarterly or annual payout yourself, instead of being pushed into a full annuity or a one-time lump sum. You must still buy the minimum annuity for the prescribed portion.

If you are short on time, jump to the comparison tables below to see how the new Retirement Income Scheme stacks up against a full annuity and a lump sum, and how the two payout methods differ.

The Retirement Income Scheme is a drawdown facility introduced by the PFRDA circular dated 15 May 2026. It lets a retiring NPS subscriber keep the withdrawable part of the corpus invested and self-draw a regular income. It is an alternative to taking that part as a single lump sum.

• You are an NPS subscriber reaching exit and choosing how to take your corpus.
• RIS and drawdown apply only to the withdrawable portion of your corpus.
• You must still use the minimum prescribed portion, 20% or 40% depending on your category, to buy an annuity for lifelong pension.
• You can set your payout frequency as monthly, quarterly or annual.
• You pick one of two drawdown methods, SPR or SUR, described below.

This table contrasts the three routes for the withdrawable portion of your corpus. Note that the mandatory annuity sits outside this choice and applies in every case.

Once you choose RIS, you select how each payout is calculated.

1. Confirm your annuity share. Set aside the minimum prescribed portion, 20% or 40% depending on your category, to buy an annuity for lifelong pension. RIS applies only to what is left.
2. Choose RIS for the withdrawable portion. At exit, opt to keep this portion invested in NPS under the Retirement Income Scheme instead of taking a lump sum.
3. Pick your method. Select Systematic Payout Rate, SPR, or Systematic Unit Redemption, SUR, based on the table above.
4. Set your frequency. Choose monthly, quarterly or annual payouts to match your spending pattern.
5. Review periodically. Track how your remaining corpus moves and adjust within the rules the scheme allows.

For background on the older exit split, see the related guides below.

• Assuming RIS replaces the annuity. It does not. The mandatory annuitisation still applies to the 20% or 40% prescribed portion.
• Confusing SPR and SUR. SPR fixes a rising payout percentage, SUR fixes the number of units redeemed. They behave differently as markets move.
• Picking a frequency that strains cash flow. An annual payout means waiting a year between credits. Choose monthly if you rely on the income for daily expenses.
• Treating the corpus as untouched savings. Under SPR the corpus is designed to be drawn down by about age 85, so plan for that horizon.

No. The mandatory annuitisation still applies. You must use the minimum prescribed portion, 20% or 40% depending on your category, to buy an annuity for lifelong pension. RIS and drawdown apply only to the withdrawable portion of your corpus.

Under Systematic Payout Rate, SPR, a payout percentage is set by your age and remaining drawdown period and rises each year, so the corpus is used up by about age 85. Under Systematic Unit Redemption, SUR, an equal number of units is redeemed each period instead.

You can choose monthly, quarterly or annual payouts. Pick the frequency that matches how you spend. Monthly suits retirees who rely on the income for routine expenses, while annual may suit those with other income sources.

The Retirement Income Scheme and drawdown options were introduced by the PFRDA circular dated 15 May 2026, built on amendments to the PFRDA, Exits and Withdrawals under NPS, Regulations, 2025.

Yes. That is the core benefit. Instead of taking a lump sum, you keep the withdrawable portion invested in NPS and draw a regular income from it. The mandatory annuity portion is separate and goes to an insurer.

• Check which category you fall in and whether your minimum annuity share is 20% or 40%.
• Estimate your withdrawable portion after setting aside the annuity share.
• Decide whether a planned drawdown under SPR or steady unit redemption under SUR fits your needs.
• Note your preferred payout frequency: monthly, quarterly or annual.
• If your NPS provider or PFRDA has not explained your options, file an RTI using the AI RTI Drafter to ask the NPS Trust or PFRDA for the applicable terms.

• PFRDA circular dated 15 May 2026, Introduction of Retirement Income Schemes, RIS, and Drawdown options under NPS.
• PFRDA, Exits and Withdrawals under NPS, Regulations, 2025, as amended.
• The RTI Playbook for filing and escalating RTI requests.

• NPS exit rules: the 60 and 40 lump sum and annuity split
• NPS Systematic Lump Sum Withdrawal, SLW, explained
• How to file an NPS or PFRDA grievance
• How to open an NPS account in 2026
• Old Pension Scheme vs NPS compared
• Unified Pension Scheme, UPS, eligibility explained

The NPS Retirement Income Scheme allows drawdown for monthly pension. Here is the complete 2026 guide:

1. Step 1: What is NPS exit? (a) at age 60: the subscriber can exit NPS (superannuation exit), (b) the corpus is split: (i) 60% lump sum (tax-free), (ii) 40% annuity (must be used to purchase an annuity from a PFRDA-registered Annuity Service Provider (ASP)), © the subscriber can choose: (i) 100% commutation (if corpus is up to Rs 5 lakh — full withdrawal allowed since 2023), (ii) higher annuity (up to 100% annuity — for those who want higher monthly pension).
2. Step 2: Annuity options. (a) Annuity for Life (highest monthly payout — stops at death), (b) Annuity for Life with Return of Purchase Price (ROP — the purchase price is returned to the nominee), © Annuity for Life with 100% spouse coverage (the spouse continues to receive the annuity after the subscriber's death), (d) Annuity for Life with 100% spouse coverage and ROP (the spouse receives the annuity and the purchase price is returned to the nominee), (e) the monthly annuity rate depends on: (i) the purchase price, (ii) the annuity option, (iii) the ASP (SBI Life, HDFC Life, ICICI Prudential, Star Union Dai-ichi, etc.).
3. Step 3: Monthly pension calculation. (a) Example: Corpus Rs 50 lakh → 40% annuity = Rs 20 lakh, (b) Annuity rate (approximate): Rs 5,000-6,000 per lakh per month (for Life annuity — without ROP), © Monthly pension = Rs 20 lakh / 1 lakh x Rs 5,500 = Rs 1,10,000/month (approximately — actual rate varies by ASP and option), (d) with ROP: the rate is lower (approximately Rs 4,000-4,500 per lakh — because the purchase price is returned to the nominee).
4. Step 4: Premature exit (before age 60). (a) the subscriber can exit before age 60 (only for specified reasons: critical illness, disability, or emigration), (b) the corpus is split: (i) 80% annuity, (ii) 20% lump sum (the annuity requirement is higher for premature exit), © if corpus is up to Rs 2.5 lakh: 100% lump sum (full withdrawal allowed for small corpus).
5. Step 5: Tax treatment. (a) 60% lump sum: tax-free (exempt under Section 10(12A)), (b) 40% annuity purchase: tax-free at the time of purchase (but the annuity income is taxable as “Income from Other Sources” in the year received), © the annuity income is added to the subscriber's total income and taxed at the applicable slab rate, (d) no TDS on annuity income if the subscriber submits Form 15G/15H (if eligible).
6. Step 6: How to exit. (a) submit the exit request online (cra-nsdl.com or karvy.com — the NPS Central Recordkeeping Agency), (b) upload: (i) KYC documents (Aadhaar, PAN), (ii) bank account details, (iii) annuity preference (ASP and annuity option), (iv) nomination details, © the CRA verifies the documents and processes the exit (typically 15-30 days), (d) the lump sum is credited to the bank account and the annuity is set up with the ASP.
7. Step 7: Common issues. (a) the annuity rate is low (compared to bank FD — but annuity provides lifelong income), (b) the annuity income is taxable (unlike the lump sum which is tax-free), © the ASP options are limited (only 6-7 ASPs registered with PFRDA), (d) the exit processing is slow (the CRA takes 15-30 days — sometimes longer), (e) the subscriber cannot change the ASP after purchasing the annuity (irrevocable choice).

See NPS RIS and Find PIO.