PFRDA forms expert committee to design assured payout mechanism under NPS

New Delhi: The Pension Fund Regulatory and Development Authority (PFRDA) has constituted a high-level committee to formulate guidelines and regulations to enable a framework for assured payouts under the National Pension System (NPS). 

This move aligns with the provisions of the PFRDA Act and aims to enhance the security of retirement income for subscribers, according to a Finance Ministry statement issued on Tuesday.

The committee will be chaired by Dr M.S. Sahoo, Founder of Dr Sahoo Regulatory Chambers and former Chairperson of the Insolvency and Bankruptcy Board of India (IBBI). The 15-member panel includes a diverse group of experts from various disciplines such as legal, actuarial, finance, insurance, capital markets and academia. Furthermore, to ensure comprehensive deliberation, the committee has been authorised to invite external experts or intermediaries as special invitees for feedback and consultation, the statement said.

The committee is established as a standing advisory committee on structured pension payouts. Its primary mandate includes creating regulations for assured payouts, including exploring the pension schemes as highlighted in the PFRDA consultation paper dated September 30, 2025 and ensuring a smooth end-to-end transition for subscribers moving from the accumulation phase to the decumulation (payout) phase.

The committee is also expected to deliberate on novation and settlement concepts to ensure legally enforceable and market-based guarantees, and define terms such as lock-in periods, withdrawal limits, pricing mechanisms, and fee structures for providers.

Besides, the committee is entrusted with 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.

Developing a standardised disclosure framework to prevent mis-selling and manage subscriber expectations regarding the nature of assurance and market-based guarantee also comes under the purview of the committee.

"The formation of this committee is a significant step by PFRDA towards the broader vision of a Viksit Bharat 2047, where every citizen achieves true financial independence and dignity in their golden years," the statement added.