Until recently, the National Pension System did not work for many, and the primary reason for this was the mandate of 40% annuitization. Under this, an investor had to commit at least 40% of her retirement nest egg accumulated through the NPS into buying an annuity at the time of retirement and at the rates prevailing then.

But that changed last year, when the mandatory annuity rule was brought down to 20% for non-government subscribers, following the introduction of a systematic lump sum withdrawal plan in 2023 that allowed customers to keep the corpus inside the NPS and withdraw in instalments over time, rather than taking it all at once.

This year, the Pension Fund Regulatory and Development Authority (PFRDA) went a step further. It introduced the Retirement Income Scheme (RIS) that allows retirees to withdraw non-annuitized corpus in a regular and systematic manner.