The Pension Fund Regulatory and Development Authority (PFRDA) has formed a high-level expert committee to create a path to assured and stable income after retirement under the National Pension System (NPS). This committee has been entrusted with the task of making rules and guidelines under the existing NPS framework, so that pensioners can get market-based but legally enforceable guaranteed pension.
This step by PFRDA is considered important not only to strengthen the retirement security of pensioners but also to align with the government’s larger goal of a developed India by 2047, which includes ensuring financial independence and a dignified life in old age to every citizen.
This committee of 15 members is headed by Dr. M.S. Sahu, who is the former chairman of Insolvency and Bankruptcy Board of India (IBBI) and currently the founder of Dr. Sahu Regulatory Chambers. This committee includes experts from law, actuarial science, finance, insurance, capital markets and academia. PFRDA has also empowered the committee to include external experts and intermediary institutions as special invitees in the discussions, if necessary. This committee will act as a standing advisory body on structured pension payouts. Its main objective is to create a regulatory framework for confirmed pension payouts in NPS, which will be based on the pension schemes suggested in the PFRDA consultation paper released on September 30, 2025. The Committee will also ensure that the process from the stage of accumulation of investment in NPS to the distribution stage of pension payout is simple, transparent and easy for the subscriber.
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Additionally, the Committee will consider ways to make market-based guarantees legally enforceable. This includes exploring concepts such as novation and settlement to ensure the reliability of pension payouts. Operational aspects such as lock-in period, withdrawal limits, pricing models and service charges will also be clearly defined. Risk management will also be a key focus of the committee’s work. Under this initiative, capital and solvency requirements will be determined, and tax aspects will be reviewed for cases where pensioners receive guaranteed pension without exiting the NPS. Additionally, a standardized disclosure framework will be developed to protect customer interests, prevent mis-selling and clearly explain the difference between guaranteed and market-based guarantees in pensions. Overall, this initiative by PFRDA is a solid step towards creating a more secure and reliable pension system by transforming NPS from a completely market-based retirement product. The recommendations of the expert committee could shape the future of India’s pension system to a great extent.