Retirement Income Scheme
Also written RIS · Retirement Income Scheme (RIS) · RIS Steady
The NPS life-cycle scheme that holds the drawdown corpus during decumulation, cutting equity on a glide path from 35 per cent at 60 to 10 per cent at 75, while paying out through SPR or SUR up to age 85.
In plain language
For most of its history the NPS ended at the exit door: a mandatory annuity, and the rest as a lump sum the subscriber had to manage alone. The Retirement Income Scheme (RIS) keeps that lump-sum portion inside the NPS, invested, and pays it out in instalments.
The RIS is the investment vehicle. How the money comes out is a separate choice between two drawdown methods — the Systematic Payout Rate or Systematic Unit Redemption.
The stated objective is to optimise periodic payouts, improve cash-flow predictability and corpus longevity, and minimise the risk of the corpus running out before the drawdown period ends.
How it works
Where it comes from. PFRDA Circular No. PFRDA/2026/31/MWnR/01 dated 15 May 2026, in line with the PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025.
Eligibility. Both Government and Non-Government sector subscribers wishing to receive systematic payouts from their designated pension corpus up to a maximum age of 85.
The variant. Currently one: RIS Steady, a continuously declining annual glide path that reduces equity from 35 per cent at age 60 to a floor of 10 per cent at age 75, held constant until 85.
Operating rules:
| Parameter | Rule |
|---|---|
| Payout frequency | Monthly, quarterly or annual; payouts start the month after the request is processed |
| Rebalancing | On the subscriber's birthday each year, along the glide path |
| Pension fund switch | Once every two financial years |
| Redemption | Units from each asset class in proportion to the corpus held in it |
| Death during drawdown | Balance paid under the Exits and Withdrawals Regulations |
| Residual corpus (SPR) | Withdraw as lump sum, or combine with a deferred annuity component to buy an annuity |
Disclosures. No guarantee on payouts; a projection of benefits and residual corpus, preferably through an online calculator; and a separate Retirement Income Statement with an annual Reset Notification (for SPR) and an Asset Rebalancing Summary across E, C and G.
What it does not change. The mandatory annuitisation of 20 or 40 per cent is untouched.
A worked example
Vikram, a Government-sector subscriber, retires at 60 with Rs 1,00,00,000 of accumulated pension wealth.
Mandatory annuity (at least 40%) = Rs 40,00,000 ← unchanged by the RIS
Lump-sum portion (up to 60%) = Rs 60,00,000 ← may go into drawdown
He places the full Rs 60,00,000 in RIS Steady. On day one:
Equity at 60 = 35% × 60,00,000 = Rs 21,00,000
Debt = 65% × 60,00,000 = Rs 39,00,000
Fifteen birthdays later, at 75, the glide path has reached its floor. If the drawdown corpus then stood at Rs 30,00,000 (an illustrative figure — the actual value depends on markets and payouts):
Equity at 75 = 10% × 30,00,000 = Rs 3,00,000
and it stays at 10 per cent to 85. He never has to decide when to de-risk: the scheme does it on each birthday.
What he gives up against a one-time lump sum is the guarantee of the amount. The workbook requires that he be told plainly that payouts are subject to market risk — which is why the annuity half is left in place.
Why NISM asks about it
Chapter 4, section 4.2.4 (Exit and Withdrawal from the NPS), sets out Retirement Income Schemes and Drawdown Options, including the RIS Steady glide path, SPR and SUR, the specific guidelines table and the subscriber disclosures. Chapter 4, section 4.1.2, lists the RIS/Drawdown decumulation options among the current NPS products, and Chapter 7, section 7.6 (Automating Investments), compares the drawdown facility to a mutual fund Systematic Withdrawal Plan. Expect recall of the 35 / 10 / 75 / 85 glide-path numbers and the rule that drawdown leaves the annuity requirement intact.
Common exam traps
- The RIS is the scheme; SPR and SUR are the payout methods. A question calling SPR a scheme is mixing the two.
- Drawdown does not reduce the mandatory annuity. It applies only to the lump-sum portion.
- 35 per cent at 60, 10 per cent at 75, flat to 85. The floor is reached at 75, not at 85.
- Rebalancing happens on the birthday, not on the financial-year end.
- Pension fund switches: once every two financial years, not once a year.
- No guarantee. RIS payouts are market-linked; only the annuity is guaranteed.
- Only one variant, RIS Steady, is currently available.
Check yourself
1.A subscriber to the NPS receives the pension for income in retirement from:
- a)An annuity purchased on retirement
- b)The corporate employer
- c)PFRDA
- d)The government
Show the answer
Answer: (a) An annuity purchased on retirement
This is the workbook sample question. At retirement the subscriber draws the corpus so created TO BUY AN ANNUITY THAT WILL PROVIDE REGULAR INCOME IN RETIREMENT.
The annuity is issued by an Annuity Service Provider — one of 15 IRDAI-regulated life insurance companies empanelled by PFRDA. PFRDA regulates but pays no pension; the employer contributes during service but pays nothing after; the government contributes 14% for its own employees but does not pay the pension.
⚠️ Two places where a guarantee does come from the government are worth keeping separate in your mind: in the Atal Pension Yojana, the pension is guaranteed by the Government of India; and the Unified Pension Scheme carries an assured payout of 50% of the last 12 months' average basic pay. Neither is how a standard NPS pension arises.
2.Which of the following persons is DISQUALIFIED from joining the NPS?
- a)A person who is already a member of the Employees' Provident Fund
- b)A non-resident Indian citizen
- c)An undischarged insolvent
- d)An Overseas Citizen of India cardholder
Show the answer
Answer: (c) An undischarged insolvent
The workbook names exactly three disqualifications: ⚠️ UNDISCHARGED INSOLVENTS, PERSONS OF UNSOUND MIND and PERSONS WHO ALREADY HOLD AN ACCOUNT WITH THE NPS.
The other three options are all expressly permitted:
- ⚠️ "Being a member of ANY OTHER SOCIAL SECURITY PROGRAM OR PENSION FUND, SUCH AS THE PROVIDENT FUND, whether government sponsored or private, DOES NOT PRECLUDE an individual from subscribing to the NPS"
- NRIs may join — "any citizen of India, WHETHER RESIDENT OR NON-RESIDENT, between 18 and 85 years"
- OCI cardholders are "permitted to enrol in NPS, subject to applicable conditions"
One restriction does apply to the last two: ⚠️ Tier II is NOT permitted for NRI and OCI subscribers — but that limits the account type, not eligibility for the NPS itself.
3.Under Active Choice in a Tier I account, what are the maximum permitted allocations to equity (E) and alternative investments (A)?
- a)100% in E and 25% in A
- b)75% in E and 5% in A
- c)50% in E and 10% in A
- d)65% in E and 15% in A
Show the answer
Answer: (b) 75% in E and 5% in A
"The only restriction is that THE PROPORTION INVESTED IN ASSET CLASS E CANNOT EXCEED 75 PERCENT and that in ASSET CLASS A IS RESTRICTED TO 5 PERCENT."
These are not soft guidelines. An application breaching either is rejected outright: ⚠️ "In case of active choice, IF THE ALLOCATION TO EQUITY (E) CATEGORY EXCEEDS 75 PERCENT AND/OR ALTERNATIVE INVESTMENT PRODUCTS (A) CATEGORY EXCEEDS 5 PERCENT, THE APPLICATION SHALL BE REJECTED" — as is one where the asset allocation does not add up to 100 percent.
Two places where higher equity is possible: ⚠️ Tier II schemes can invest up to 100% in equity, and the MSF high-risk variant permits up to 100% — described as a departure from the 75 per cent equity cap that continues to apply to Common Schemes.
And one where it is lower: a subscriber joining beyond 65 is capped at 15% under Auto and 50% under Active.
Where this is taught
Free preparation for NISM Series XVIIRelated terms
- Systematic Withdrawal PlanA standing instruction to redeem a set amount — or only the appreciation — from a mutual fund scheme at a chosen frequency, used to manufacture a regular income in retirement.
- National Pension SystemA PFRDA-regulated, defined-contribution retirement scheme in which the subscriber builds a market-linked corpus and must convert part of it into an annuity at exit; there is no guaranteed return.
- AnnuityAn insurance contract in which a corpus paid as a lump sum or in instalments buys a periodic payment from the insurer, at a rate fixed at purchase and guaranteed for life or the contracted term.
- Systematic Lump Sum WithdrawalAn NPS exit mode that pays out the eligible lump-sum portion of a subscriber's corpus in periodic instalments, up to age 85, instead of as one payment.
- Systematic Payout RateThe default NPS drawdown method: each year the payout rate is 1 ÷ (drawdown end age − current age), applied to the corpus value on the subscriber's birthday.
- Systematic Unit RedemptionAn NPS exit mode that redeems a fixed number of units every period over the chosen drawdown period — minimum six years — so the rupee payout moves with the NAV.
- Phased redemptionSelling a volatile holding in instalments rather than all at once, so the retiree is not forced to realise the whole corpus at one day's price — the workbook's phased case realised 7.5 percent more.