Pension 2026: NPS assured payouts on cards as PFRDA sets up high-level advisory panel

The Pension Fund Regulatory and Development Authority (PFRDA) has set up a high-level committee to frame guidelines and regulations for introducing assured payout options under the National Pension System (NPS), a move aimed at strengthening retirement income security for millions of subscribers. The initiative aligns with provisions of the PFRDA Act and supports the broader vision of Viksit Bharat 2047, which seeks to ensure financial independence and dignity for citizens in their post-retirement years.

The committee will be chaired by M. S. Sahoo, Founder of Dr. Sahoo Regulatory Chambers and former Chairperson of the Insolvency and Bankruptcy Board of India (IBBI). It comprises 15 members drawn from diverse fields including law, actuarial science, finance, insurance, capital markets and academia. To ensure wide-ranging inputs, the panel has also been authorised to invite external experts and intermediaries as special invitees for consultations.

According to the regulator, the committee will function as a standing advisory body on structured pension payouts. Its central task is to design a regulatory framework for assured payout products under the NPS, including options outlined in PFRDA’s consultation paper released on September 30, 2025. The move marks a significant shift from the current system, which largely relies on market-linked returns and annuity purchases, towards mechanisms that can offer subscribers greater certainty over post-retirement income.

What's new

A key area of focus will be ensuring a smooth transition for subscribers from the accumulation phase to the payout, or decumulation, phase. The committee will examine how this shift can be made seamless and transparent, reducing complexity and improving subscriber confidence at the point of retirement. It will also evaluate market-based models that can provide legally enforceable assurances, including the use of novation and settlement structures to underpin guaranteed or semi-guaranteed payouts.

ToR explained

The panel’s terms of reference extend beyond product design to the operational and regulatory architecture needed to support such offerings. This includes defining lock-in periods, withdrawal limits, pricing mechanisms and fee structures for service providers. It will also recommend robust risk management norms, including capital adequacy and solvency requirements, to ensure that institutions offering assured payouts remain financially sound over long horizons.

Another important mandate is legal and tax clarity. The committee will study the tax treatment of assured payouts, particularly in cases where subscribers do not exit the NPS framework but continue within its architecture during the payout phase. Clear rules in this area are expected to reduce uncertainty and encourage wider adoption of structured pension solutions.

Consumer protection will be a central pillar of the proposed framework. The panel has been tasked with developing standardised disclosure norms to prevent mis-selling and to ensure subscribers clearly understand the nature of assurances—whether they are fully guaranteed or market-linked with conditional protections. By managing expectations and improving transparency, the regulator aims to build long-term trust in retirement products.

PFDRA's MSF

PFRDA has also issued a fresh circular outlining how subscriber information will be shared under the Multiple Scheme Framework (MSF) for non-government NPS subscribers. As per the circular, dated January 12, 2026, operational clarity to Central Recordkeeping Agencies (CRAs) and Pension Funds (PFs) on data-sharing protocols will be introduced after the MSF rollout in September 2025.

The MSF allows pension funds to design and manage multiple NPS schemes under their own brand identity, aimed at improving outreach, innovation and subscriber engagement. Under the new guidelines, CRAs will share subscriber data with PFs through a common prescribed template and at mutually agreed intervals. However, information will only be shared for subscribers enrolled in schemes managed by the respective PFs under MSF. Data of subscribers invested only in common schemes will not be disclosed.

PFRDA has placed strong emphasis on data privacy and security. Subscriber information can be used solely for scheme design, distribution, outreach, value-building and servicing. Any unauthorised use or disclosure is strictly prohibited and may invite regulatory and legal action.

The circular mandates strict compliance with the Digital Personal Data Protection Act, 2023, the Information Technology Act, 2000, and existing CRA and PF Regulations. It also introduces a detailed information-sharing template covering personal and financial details to enable more personalised engagement. PFRDA has asked CRAs and PFs to align systems and maintain audit trails to ensure full regulatory compliance.