To strengthen the retirement income security of subscribers, the PFRDA today (January 13) announced the formation of a high-level committee tasked with formulating guidelines and regulations to enable a framework for assured payouts under the National Pension System (NPS).
“The constitution of an expert committee by PFRDA signals a measured and forward-looking approach to introducing assured payout mechanisms within NPS. If structured with clear legal enforceability, prudent solvency norms and transparent disclosures, such a framework can meaningfully address longevity risk while maintaining fiscal and market discipline,” said Rohitaashv Sinha, Partner, King Stubb & Kasiva, Advocates and Attorneys.
The Pension Fund Regulatory and Development Authority (PFRDA) has also notified the Terms of Reference (ToR) for the committee to develop a framework for assured payout under NPS.
An assured payout is a fixed, guaranteed income a retiree receives regularly, regardless of market conditions. Various government schemes like Atal Pension Yojana (APY), Unified Pension Scheme (UPS), and Employee Provident Fund (EPF) offer assured payout for financial security and a predictable income for a set period.
According to PFRDA, the 15-member committee will be chaired by Dr MS Sahoo, Founder of Dr Sahoo Regulatory Chambers and former Chairperson of the Insolvency and Bankruptcy Board of India (IBBI). The members will comprise a diverse group of experts from various disciplines such as legal, actuarial, finance, insurance, capital markets and academia.
Here are the key objectives and terms of reference for the NPS assured payout committee, according to PFRDA —
Framework Development: Creating regulations for assured payouts, including exploring the pension schemes as highlighted in the PFRDA consultation paper dated September 30, 2025.Seamless Transition: Ensuring a smooth end-to-end transition for subscribers moving from the accumulation phase to the decumulation (payout) phase.Market-Based Assurance: Deliberating on novation and settlement concepts to ensure legally enforceable and market-based guarantees.Operational Design: Defining terms such as lock-in periods, withdrawal limits, pricing mechanisms and fee structures for providers.Risk & Legal Oversight: Establishing robust risk management (capital and solvency requirements) and examining tax implications for payouts that do not require a subscriber to exit the NPS architecture.Consumer Protection: Developing standardised disclosure frameworks to prevent mis-selling and manage subscriber expectations regarding the nature of assurance and market-based guarantee.
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