The pension fund regulator is looking to introduce new post-retirement income products that can outperform conventional annuities while sustaining the double-digit accumulation returns delivered under the National Pension System (NPS), said PFRDA Chairman Sivasubramanian Ramann, according to a Times of India report.
Addressing the PFRDA Retire Smart India event in association with The Times of India, Ramann said the regulator’s mandate goes beyond incremental adjustments.
“The biggest challenge that PFRDA has got is to put a pension account in each Indian’s hand,” he noted, underscoring efforts to deepen corporate adoption and expand coverage.
Shift Beyond Traditional Annuities
Current norms require at least 20% of the retirement corpus to be deployed in insurer annuities, often criticised for modest and inflexible payouts.
The regulator is evaluating structured, fixed-period payout models instead of traditional life-only income streams, as per the TOI report.
Ramann indicated that the proposed Minimum Assured Return Scheme could offer predictable returns for risk-averse investors.
Under the framework, sponsors would absorb shortfalls while subscribers share surpluses.
Higher fees and defined lock-ins may support sustainability, creating a capital-protected retirement pathway for both new and existing NPS investors.
Performance data shared at the event showed even conservative NPS options generated around 9.3% annual returns over the past decade, with other choices delivering double-digit gains.
An expert committee is now reviewing future asset allocation, including calibrated exposure to new asset classes and potential participation in project loans.
Digital Push and Broader Inclusion
To widen participation, PFRDA is adopting a digital-first strategy with low-friction onboarding via UPI apps, targeting self-employed and informal workers.
Platform partnerships with food delivery, ride-hailing, and home services companies aim to facilitate small, regular contributions from gig workers.
The regulator has also launched the NPS Swasthya Pension Scheme as a pilot to integrate pension savings with healthcare planning.
The scheme enables subscribers to build a medical emergency corpus and reduce insurance costs by opting for top-up cover over accumulated savings.
Additional reforms include allowing participation until age 85, recognising 15 years as long-term savings, lowering the mandatory annuity purchase for voluntary subscribers to 20% from 40%, and enabling higher equity exposure under auto choice for government employees.
Succession processes have also been streamlined, with nominee transfers structured to avoid capital gains tax implications.
