NPS Retirement Income Scheme (RIS) Explained: SPR vs SUR with Real Numbers
Starting May 2026, you no longer have to take your NPS lump sum as a one-time withdrawal. The new Retirement Income Scheme (RIS) lets you keep your money invested inside NPS after retirement and draw it down gradually — with market-linked returns — till age 85. Think of it as an SWP (Systematic Withdrawal Plan) built into NPS. Here's how it works, what it pays, and when it makes sense.
What Is RIS?
RIS is a post-retirement drawdown framework introduced by PFRDA via Circular No. PFRDA/2026/31/MWnR/01 dated 15 May 2026. It applies to the lump sum portion of your NPS corpus (the 80% for non-govt or 60% for govt subscribers).
Instead of withdrawing this amount at exit, you can park it in a dedicated lifecycle fund called RIS Steady and receive periodic payouts while the corpus continues to earn returns.
Key point: RIS does not replace the mandatory annuity. You still need to buy an annuity with 20% (non-govt) or 40% (govt) of your corpus. RIS applies only to the remaining lump sum portion.
Who Can Use RIS?
| Parameter | Detail |
|---|---|
| Eligible subscribers | Both Government and Non-Government |
| When you can opt in | At the time of NPS exit (age 60 or after 15 years for non-govt) |
| Maximum drawdown age | 85 years |
| Payout frequency | Monthly, quarterly, or annual |
| Fresh contributions | Stop once you enter RIS |
| Fund switching | Allowed once every 2 financial years |
The Fund: RIS Steady
Your money in RIS goes into a lifecycle fund with a declining equity allocation:
| Age | Equity (E) | Corporate Bonds (C) | Govt Securities (G) |
|---|---|---|---|
| 60 | 35% | 10% | 55% |
| 62 | 31% | 12% | 57% |
| 65 | 25% | 15% | 60% |
| 68 | 19% | 18% | 63% |
| 70 | 15% | 20% | 65% |
| 73 | 12% | 20% | 68% |
| 75 | 10% | 20% | 70% |
| 78 | 10% | 17% | 73% |
| 80+ | 10% | 15% | 75% |
The glide path reduces equity from 35% at 60 to a floor of 10% at 75, held constant thereafter. This balances growth potential with stability as you age.
Rebalancing: Happens annually on your birthday, based on the market value of your corpus at that time.
Two Drawdown Options
When you opt for RIS, you choose one of two methods to receive payouts:
Option 1: Systematic Payout Rate (SPR) — Default
How it works: Each year, a fixed percentage of your corpus is paid out. The percentage increases as you age (because the remaining drawdown period shrinks).
Formula:
SPR = 1 ÷ (Drawdown End Age − Current Age)
Payout per period:
Payout = (SPR ÷ n) × Market Value of Corpus on Birthday
Where n = payout frequency (12 for monthly, 4 for quarterly, 1 for annual)
SPR Table (Exit at 60, Drawdown End Age 85):
| Age | SPR (Annual) | Monthly Payout Rate |
|---|---|---|
| 60 | 4.00% | 0.33% of corpus |
| 62 | 4.35% | 0.36% |
| 65 | 5.00% | 0.42% |
| 68 | 5.88% | 0.49% |
| 70 | 6.67% | 0.56% |
| 73 | 8.33% | 0.69% |
| 75 | 10.00% | 0.83% |
| 78 | 14.29% | 1.19% |
| 80 | 20.00% | 1.67% |
| 83 | 50.00% | 4.17% |
| 84 | 100.00% | 8.33% |
Key characteristics: - Payout amount resets every year on your birthday based on current market value - If markets do well, your payout increases. If markets fall, it decreases. - May leave a residual corpus at the end (you can withdraw it as lump sum or buy annuity) - Provides a natural inflation hedge — payouts grow if corpus grows
Option 2: Systematic Unit Redemption (SUR) — Equal Units
How it works: Your total units are divided equally across the entire drawdown period. A fixed number of units are redeemed each payout period, regardless of NAV.
Formula:
Units per payout = Total Units ÷ (Drawdown Period × Payout Frequency)
Key characteristics: - Fixed number of units redeemed each period - Rupee amount varies with NAV — you get more when markets are up, less when down - Corpus is fully exhausted by the end of the drawdown period (no residual) - Simpler to understand — you know exactly how many units you'll redeem
Real Numbers: ₹1 Crore Corpus in RIS
Let's see what RIS actually pays. Assume: - Corpus entering RIS: ₹1,00,00,000 (₹1 crore) - Exit age: 60 - Drawdown end age: 85 - Payout frequency: Monthly
SPR Method
Year 1 (Age 60): - SPR = 4.00% - Annual payout = 4% × ₹1,00,00,000 = ₹4,00,000 - Monthly payout = ₹4,00,000 ÷ 12 = ₹33,333/month
Year 5 (Age 65), assuming 8% corpus growth: - Corpus after 5 years of growth and withdrawals ≈ ₹1,05,00,000 (illustrative) - SPR = 5.00% - Annual payout = 5% × ₹1,05,00,000 = ₹5,25,000 - Monthly payout = ₹43,750/month
Year 10 (Age 70), assuming continued 7% growth: - Corpus ≈ ₹95,00,000 (illustrative — growth partially offset by withdrawals) - SPR = 6.67% - Annual payout = 6.67% × ₹95,00,000 = ₹6,33,650 - Monthly payout = ₹52,804/month
Year 15 (Age 75): - SPR = 10.00% - Payouts accelerate significantly from here
Pattern: Monthly income starts modest and grows over time — both because the SPR percentage increases and because the corpus earns returns. This provides a natural inflation hedge.
SUR Method (Equal Units)
- NAV at entry: ₹50 (illustrative)
- Total units: ₹1,00,00,000 ÷ 50 = 2,00,000 units
- Drawdown period: 25 years × 12 months = 300 payouts
- Units per month: 2,00,000 ÷ 300 = 666.67 units/month
Year 1 (NAV ₹50): 666.67 × ₹50 = ₹33,333/month
Year 5 (NAV ₹65): 666.67 × ₹65 = ₹43,333/month
Year 10 (NAV ₹80): 666.67 × ₹80 = ₹53,333/month
Year 20 (NAV ₹120): 666.67 × ₹120 = ₹80,000/month
With SUR, your monthly income grows if NAV rises. But it can also fall in a market downturn.
SPR vs SUR: Which Should You Choose?
| Factor | SPR (Default) | SUR (Equal Units) |
|---|---|---|
| Payout predictability | Resets annually — varies year to year | Fixed units, but ₹ amount varies with NAV |
| Corpus exhaustion | May leave residual at end | Fully exhausted by end of drawdown |
| Market risk on payouts | Moderate — annual reset smooths volatility | Higher — each payout directly tied to current NAV |
| Inflation hedge | Good — payouts grow with corpus | Good — payouts grow with NAV |
| Simplicity | Slightly complex (formula-based) | Simpler (fixed units) |
| Best for | People who want some corpus preservation | People who want full drawdown with no residual |
Practical guidance: - If you want a safety net (residual corpus at 85 in case you live longer), choose SPR - If you want maximum income and are comfortable fully depleting the corpus by 85, choose SUR - If you're unsure, SPR is the default — and it's the more conservative choice
RIS vs Traditional Annuity vs Lump Sum + Mutual Fund SWP
| RIS (New) | Traditional Annuity | Lump Sum → MF SWP | |
|---|---|---|---|
| Returns | Market-linked (7-10% blended) | Fixed 5.5-7.5% | Market-linked (10-12% equity) |
| Guarantee | None — market risk | Guaranteed pension for life | None — market risk |
| Inflation protection | Partial (equity component) | None | Good (if equity-heavy) |
| Flexibility | Choose frequency; switch PFM every 2 years | Zero — locked for life | Full — change amount, pause, stop anytime |
| On death | Remaining balance to nominee | Depends on annuity type | Full balance to nominee |
| Tax efficiency | Unclear (60% vs 80% mismatch) | Annuity income fully taxable | LTCG at 12.5% above ₹1.25L |
| Charges | NPS charges (0.05-0.11% fund management) | Insurance company margins built in | MF expense ratio (0.1-1.5%) |
| Max duration | Till age 85 | Lifetime | No limit |
| Control | Limited (can't change drawdown method mid-way) | None | Full |
When RIS makes sense: - You want market-linked returns but don't want to manage a separate MF portfolio - You're comfortable with NPS's low-cost structure - You want a structured drawdown without the discipline risk of managing it yourself - Your corpus is large enough that the 20% annuity covers basic needs, and RIS provides the growth layer
When RIS doesn't make sense: - You want full control over asset allocation (RIS Steady is the only fund option currently) - You need guaranteed income (use annuity instead) - You want to continue past age 85 (RIS ends at 85; MF SWP has no age limit) - You're in a high tax bracket and the 60% vs 80% tax ambiguity concerns you
Operational Details
| Parameter | Detail |
|---|---|
| When to opt in | At the time of NPS exit — you choose RIS instead of one-shot lump sum |
| Can you change your mind? | Once you enter RIS, you cannot switch back to one-shot withdrawal |
| Drawdown method change | Cannot change between SPR and SUR after opting in |
| Fund switching | Can change pension fund manager once every 2 financial years |
| Payouts start | From the month following successful processing |
| Annual reset (SPR) | On your birthday — new payout calculated based on current corpus value |
| Asset rebalancing | On your birthday — allocation shifts per RIS Steady glide path |
| Charges | Same as existing NPS scheme charges |
| Statements | Separate Retirement Income Statement (distinct from Tier I/II) |
What Happens at the End?
SPR: Residual Corpus
Under SPR, there may be corpus remaining at the end of the drawdown period (age 85). You have two choices: 1. Withdraw as lump sum — take whatever is left 2. Buy annuity — combine with deferred annuity component (if applicable)
SUR: Full Exhaustion
Under SUR, all units are redeemed by the end of the drawdown period. No residual corpus remains.
What If You Die During Drawdown?
The remaining balance in your RIS account is paid to your nominee/legal heirs as per NPS exit regulations. They can take it as a lump sum or opt for SLW/SUR.
Key Takeaways
- RIS is an SWP inside NPS — your lump sum stays invested and you draw it down gradually
- RIS Steady is the only fund option — starts at 35% equity, glides to 10% by age 75
- SPR gives formula-based payouts that increase with age; may leave residual corpus
- SUR gives fixed-unit redemptions; corpus fully exhausted by end
- ₹1 crore in RIS at age 60 pays approximately ₹33,000-35,000/month initially, growing over time
- RIS doesn't replace annuity — the 20% (or 40%) mandatory annuity still applies separately
- Once you choose RIS, you can't switch back to one-shot withdrawal
- RIS ends at 85 — plan for what happens after if you expect to live longer
Related articles: - NPS Withdrawal Rules 2026: Everything That Changed - NPS Exit at 60: How Much Can You Withdraw? - NPS Premature Exit Before 60: The Rules Nobody Warns You About - NPS Withdrawal Tax Rules: The 60% vs 80% Problem - NPS Partial Withdrawal Rules
Sources: PFRDA Circular No. PFRDA/2026/31/MWnR/01 dated 15 May 2026 (full text including Annexure A and B with formulas), PFRDA (Exits and Withdrawals) Amendment Regulations 2025, NPS Trust (npstrust.org.in).
Disclaimer: The examples above are illustrative and assume hypothetical market returns. Actual payouts will depend on market performance. RIS payouts are not guaranteed. This is not personalized financial advice. Arth can help you model different NPS exit scenarios based on your actual corpus — visit askarth.com.
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