Assured Payout Under NPS: PFRDA Constitutes Experts Committee To Develop Regulations

The Pension Fund Regulatory and Development Authority (PFRDA) has set up a new committee to create guidelines and regulations for assured pension under the National Pension System (NPS). Recently, PFRDA introduced several changes to make the scheme more flexible for the financial needs of different age groups and social strata. Still, it lacks an assured pension for all subscribers. The committee aims to enhance retirement security and dignity in old age, according to PFRDA.

The high-level committee will have a 15-member panel. Dr. M. S. Sahoo, Founder of Dr. Sahoo, Regulatory Chambers, and former Chairperson of the Insolvency and Bankruptcy Board of India (IBBI), has been appointed the chairperson of the committee. The other members will be the experts from different fields, such as finance, actuarial, insurance, legal, capital market, and academia. However, the committee is free to invite any other external expert to receive feedback, inputs, or consultations.

The committee will be treated as a standing advisory committee and is tasked with the following mandate.

• It will be responsible for creating rules and regulations for an assured payout under NPS. So, it will need to explore different types of pension schemes discussed in the consultation paper dated September 30, 2025, released by the PFRDA.  

• It is tasked with making the process for smooth transitioning for subscribers, starting from the accumulation phase to the decumulation or withdrawal phase.  

• The committee is responsible for exploring and deliberating the settlement ideas where ‘market-based guarantees’ can be given while being enforceable under law.  

• The experts’ committee is mandated to prepare the operational design, where it will need to define various terms related to the scheme, such as lock-in period, withdrawal limits, fee structures, pricing mechanism, and so on.

• Further, the panel also needs to examine the tax implications on NPS payouts, where subscribers don’t need to exit the NPS architecture, and create a robust risk management system.

• And most importantly, the committee must ensure consumer protection from mis-selling. Hence, it will need to develop standardised disclosure frameworks to ensure investors’ protection, and at the same time, manage assured payout expectations and market-based guarantees.

In the government’s pursuit of making India ‘Viksit Bharat’ by 2047, PFRDA envisions financial independence for every citizen. And for this, it is necessary to develop unambiguous regulations and create a robust operational mechanism, along with spreading awareness.