PFRDA Seeks Feedback on New Flexible and Assured Pension Proposals

The Pension Fund Regulatory and Development Authority (PFRDA) has released a detailed Consultation Paper titled “Enhancing the National Pension System: Proposals for Flexible, Assured and Predictable Pension Schemes”. The paper, issued on 30 September 2025, marks an important step in the ongoing reform of the National Pension System (NPS) and is aimed at offering subscribers greater certainty, flexibility, and predictability in post-retirement income.

Rethinking Retirement Security

The consultation paper introduces three proposed pension schemes under the NPS framework. Each is tailored to cater to different risk appetites and income security needs of subscribers, addressing long-standing concerns about income adequacy and inflation protection during retirement.

1. Pension Scheme-1: Non-Assured, Flexible Decumulation

   • Designed for subscribers seeking flexibility and higher wealth maximization.

   • Combines a Step-up Systematic Withdrawal Plan (SWP) with an Annuity purchase.

   • Offers subscribers the ability to balance liquidity with longevity protection.

2. Pension Scheme-2: Assured Benefit Scheme

   • Introduces a Target Pension framework with an assured income stream.

   • Provides inflation-adjusted benefits by linking payouts to the Consumer Price Index for Industrial Workers (CPI-IW).

   • Intended for those who prioritize stability and predictability of retirement income.

3. Pension Scheme-3: Assured through Pension Credits

   • Proposes an innovative “Pension Credits” system where each credit ensures a fixed monthly payout.

   • Subscribers can accumulate credits towards a goal-based pension, enhancing clarity and engagement.

   • Designed to make retirement planning more transparent and goal-driven.

Addressing Subscriber Needs

With India’s pension landscape expanding rapidly, the PFRDA is responding to calls for more customized post-retirement solutions. Currently, the NPS provides tax-efficient accumulation with annuity-based withdrawals. However, critics have noted the lack of flexible income options, inflation protection, and guaranteed benefits.

By proposing flexible withdrawal plans, assured target pensions, and goal-linked pension credits, the new framework aims to address these gaps and align the NPS with global best practices in retirement systems.

Invitation for Stakeholder Comments

The PFRDA has invited comments and feedback from a wide range of stakeholders, including:

• NPS subscribers and prospective participants

• Pension fund managers and financial institutions

• Policymakers, industry experts, and academia

• Members of the general public interested in retirement reforms

The consultation paper is available on the PFRDA website under the tab Research and Publication. The full text can be accessed here: PFRDA Consultation Paper.

All feedback must be submitted using the Feedback Template provided within the document by 31 October 2025.

Strengthening India’s Pension Ecosystem

The proposed reforms are part of the government’s broader agenda to strengthen the retirement savings framework in India. With rising life expectancy and growing concerns about old-age financial security, the need for predictable, inflation-protected, and flexible retirement solutions is greater than ever.

Industry observers suggest that the PFRDA’s proposals could be transformative, offering subscribers a wider set of tools to manage their retirement wealth and giving pension funds new avenues to innovate.

Looking Ahead

By opening the proposals for public consultation, PFRDA is ensuring that the new pension framework is shaped by the needs of its participants and experts. The move also reflects the Authority’s commitment to transparency, inclusivity, and robust stakeholder engagement in policymaking.

The final adoption of these schemes could position India’s NPS as one of the most flexible and modern pension systems in the world, providing retirees with both security and choice.