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14 Jan 2026·Source: The Hindu
3 min
EconomyPolity & GovernanceNEWS

PFRDA Forms Panel for Assured National Pension Scheme Payouts

PFRDA establishes expert committee to develop framework for assured payouts under National Pension Scheme.

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PFRDA Forms Panel for Assured National Pension Scheme Payouts

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The Pension Fund Regulatory and Development Authority (PFRDA) has formed a 15-member expert committee to develop a framework for assured payouts under the National Pension Scheme (NPS). The committee is chaired by M. S.

Sahoo, former Chairperson of the Insolvency and Bankruptcy Board of India (IBBI). The panel will focus on operational design, lock-in periods, withdrawal limits, pricing mechanisms, fee structures, and consumer protection. This initiative addresses concerns about the adequacy of corpus and predictability of retirement income due to market volatility and investment choices.

Visual Insights

Key Metrics of National Pension Scheme (NPS) - 2026

Dashboard highlighting key statistics related to the National Pension Scheme (NPS) as of 2026, reflecting its growth and impact.

Total NPS Subscribers
75 Million

Indicates the growing acceptance and adoption of NPS as a retirement savings option.

Assets Under Management (AUM)
₹12 Trillion

Reflects the total value of investments managed under the NPS, showcasing its financial significance.

Average Annual Return (Last 5 Years)
10.5%

Shows the average return generated by NPS investments over the past five years, indicating its performance.

Quick Revision

1.

Committee members: 15

2.

Committee chair: M.S. Sahoo

3.

Objective: Assured payouts under NPS

Key Numbers

15 - Number of committee members

Exam Angles

1.

GS Paper 3: Indian Economy - Pension sector reforms

2.

GS Paper 2: Social Justice - Social security schemes

3.

Potential question types: Statement-based, analytical questions on pension reforms

More Information

Background

The National Pension System (NPS) has its roots in the broader pension reforms initiated in India in the late 1990s and early 2000s. The key driver was the unsustainable nature of the existing defined benefit pension schemes for government employees. The Old Pension Scheme (OPS) placed a significant burden on the exchequer.

The PFRDA Act of 2013 provided a statutory basis for PFRDA and formalized the NPS structure. Before NPS, the Swavalamban Scheme was launched in 2010 to encourage informal sector workers to save for retirement, which later got integrated into NPS. The initial design of NPS focused on defined contributions, with market-linked returns, shifting the risk from the government to the individual subscriber.

Over time, concerns about the adequacy of the corpus at retirement and the volatility of returns led to discussions about introducing assured payout options.

Latest Developments

In recent years, there has been increasing pressure to address the anxieties of NPS subscribers regarding post-retirement income security. Several state governments have reverted to the Old Pension Scheme (OPS), raising concerns about the long-term fiscal sustainability of such moves. The PFRDA has been exploring various options to make NPS more attractive, including guaranteed returns schemes and improved annuity products.

The government is also considering measures to promote greater awareness and financial literacy among NPS subscribers to enable them to make informed investment decisions. The formation of this expert committee is a significant step towards developing a more robust and secure retirement savings framework. Future developments are likely to focus on balancing the need for assured returns with the market-linked nature of NPS to ensure long-term sustainability and affordability.

Practice Questions (MCQs)

1. Consider the following statements regarding the National Pension System (NPS): 1. NPS is regulated by the Reserve Bank of India (RBI). 2. NPS offers both Tier-I and Tier-II accounts, with Tier-I being the primary retirement account. 3. Contributions to NPS Tier-I are eligible for tax benefits under Section 80C of the Income Tax Act. Which of the statements given above is/are correct?

  • A.1 and 2 only
  • B.2 and 3 only
  • C.1 and 3 only
  • D.1, 2 and 3
Show Answer

Answer: B

Statement 1 is incorrect as NPS is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Statements 2 and 3 are correct.

2. Which of the following statements best describes the primary objective of the expert committee recently formed by PFRDA regarding assured payouts under NPS?

  • A.To increase the contribution rates for NPS subscribers.
  • B.To develop a framework for guaranteed pension payouts under NPS.
  • C.To promote investment in equity markets by NPS subscribers.
  • D.To reduce the administrative costs associated with NPS.
Show Answer

Answer: B

The expert committee's primary objective is to develop a framework for assured payouts under the National Pension System (NPS).

3. M.S. Sahoo, who is chairing the PFRDA's expert committee on assured NPS payouts, previously held which of the following positions?

  • A.Governor of the Reserve Bank of India (RBI)
  • B.Chairperson of the Securities and Exchange Board of India (SEBI)
  • C.Chairperson of the Insolvency and Bankruptcy Board of India (IBBI)
  • D.Comptroller and Auditor General of India (CAG)
Show Answer

Answer: C

M.S. Sahoo was the former Chairperson of the Insolvency and Bankruptcy Board of India (IBBI).

4. Which of the following is NOT a stated focus area for the PFRDA expert committee on assured NPS payouts?

  • A.Operational design of assured payout schemes
  • B.Lock-in periods and withdrawal limits
  • C.Pricing mechanisms and fee structures
  • D.Promoting investment in foreign equity markets
Show Answer

Answer: D

The committee's focus areas include operational design, lock-in periods, withdrawal limits, pricing mechanisms, fee structures, and consumer protection. Promoting investment in foreign equity markets is not a stated focus area.

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