New Delhi: The National Pension System (NPS) has now introduced a major change that could reshape how retirees draw income after turning 60. Until now, retirees who did not want to withdraw the entire lump sum immediately have had the option of Systematic Lump Sum Withdrawal (SLW), a phased withdrawal route introduced in February 2023.
In May 2026, the Pension Fund Regulatory and Development Authority (PFRDA) introduced Retirement Income Schemes (RIS), along with new drawdown options, to provide more structured post-retirement income while keeping the corpus invested.
Both options seem similar initially, as they let retirees withdraw gradually instead of a lump sum. However, their design philosophies differ, which could matter over 10–20 years.
Difference between SLW and RIS
Under SLW, subscribers can withdraw the eligible lump sum portion of the NPS corpus in instalments instead of taking up to 80 percent in one shot at retirement. The money that remains invested continues to participate in market returns. “If someone stays heavily invested in equity, they remain exposed to market fluctuations. There is no automatic lifecycle adjustment,” said Sumit Shukla, MD, CEO of Axis Pension Fund.
Under SLW, subscribers can choose a withdrawal amount, duration, payout frequency (monthly, quarterly, half-yearly, or annual), and defer annuity payments till age 75. In RIS, they have payout options (except half-yearly) and can continue until age 85.
SLW is simply a withdrawal facility; the subscriber decides how much to withdraw each month, whether Rs 5,000 or Rs 10,000, without any built-in mechanism to manage the long-term sustainability of the corpus.
“RIS focuses on drawing down a percentage of the corpus rather than a fixed withdrawal amount. RIS applies only to the lump sum withdrawal portion, while the mandatory annuity purchase requirement continues to remain applicable,” said Shukla.
Under RIS, subscribers enter a post-retirement phase where savings are converted to income. Equity exposure decreases with age, from 35 percent at 60 to 10 percent at 75, then remains stable, while debt increases for stability.
“The idea behind RIS is that subscribers should not have to constantly think about how their corpus will grow, how much they can withdraw, or whether the money will last through retirement. Those considerations are already built into the product design. This is where RIS differs from an SLW,” said Shukla.
This is where RIS begins to score over SLW.
SLW gives flexibility but largely leaves withdrawal decisions to the subscriber. That creates behavioural risk. Retirees may withdraw too aggressively, underestimate longevity, or fail to rebalance investments. In contrast, RIS introduces an in-built mechanism to gradually reduce market risk and pace withdrawals with age. The regulator’s stated objective is to improve cash-flow predictability and reduce the chances of exhausting the corpus too early.
“Many investors worry about exhausting their retirement savings too early. RIS attempts to address that concern through a structured approach,” said Shukla.
However, RIS is not automatically superior for everyone.
SLW may still work better for retirees who want complete control over cash flows, expect irregular spending, or have other pension income sources and simply want NPS to act as a flexible withdrawal bucket. SLW also allows modifications and cancellations if circumstances change.
RIS, however, appears more suitable for retirees seeking a ‘salary-like’ experience after retirement. The annual reset of payouts and automatic asset rebalancing could reduce the need for active management.
So what should subscribers choose?
NPS is evolving from a wealth-accumulation product to a retirement-income platform, where the challenge for many retirees is now ensuring their wealth lasts.
Saurabh Bansal, Founder of Finatwork Investment Advisor, said, “The real innovation in NPS RIS is not higher return potential, but bringing institutional-quality retirement income management to retail Indian retirees. If implemented well, this can improve retirement sustainability far more through discipline and risk management than through return enhancement alone.
If retirement income from NPS will be your primary monthly source of income, RIS may be the stronger option because it combines periodic payouts with a structured glide path and a longevity focus.
Vishwajeet Goel, Head of Pensionbazaar.com, said, “The RIS scheme can potentially help the retirement corpus last longer compared to redeeming the entire amount as a lump sum and investing it elsewhere. Since the corpus remains invested within the regulated NPS ecosystem while withdrawals occur gradually, it benefits from potential market growth, disciplined withdrawals, and a reduced risk of premature depletion of retirement savings.”
But if you already have pension income, rental income or substantial retirement savings elsewhere and want greater withdrawal flexibility, SLW can still remain relevant.
