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				<title>My NPS Wishlist: two changes to make it more user-friendly</title>
				<link>https://freefincal.com/my-nps-wishlist-two-changes-to-make-it-more-user-friendly/</link>
				<pubDate>Tue, 06 Jan 2026 00:30:56 +0000</pubDate>
								<dc:creator><![CDATA[M. Pattabiraman]]></dc:creator>				<guid isPermaLink="false">https://freefincal.com/?p=328971</guid>
					<description><![CDATA[The reduction of the mandatory annuity requirement from 40% to 20% for non-government NPS subscribers...]]></description>

				<content:encoded><![CDATA[<figure><img src="https://freefincal.com/wp-content/uploads/2025/12/My-NPS-Wishlist-two-changes-to-make-it-more-user-friendly.avif" class="type:primaryImage" /></figure><p>The <a href="https://freefincal.com/nps-reduces-annuity-requirement-to-20-should-you-open-an-nps-account/">reduction of the mandatory annuity requirement from 40% to 20% for non-government NPS subscribers</a> is a welcome move. I wish for two major changes to the NPS that would make it more user-friendly for retirees.</p>
<p>I do not dream of the annuity option going away. That will make the NPS just another MF. It has already transitioned significantly towards an MF! I also do not think the 15-year lock-in will go away. The limited liquidity for certain causes is also not going to go away. It is a government scheme, and that is how they think.</p>
<p>I understand that some new retirement products are in discussion with the NPS regulator. While we wait for these, this is my wish list.</p>
<p><strong>1 The inclusion of the RBI Retail Direct Portal as an annuity provider.</strong></p>
<p>While life insurers will have a thing or two to say about this, the portal will allow subscribers (particularly young retirees) to get safe, guaranteed income for the remainder of their lives (you can buy up to 50Y bonds!) <em>without losing the principal*;</em> without having to provide life certification each year; in joint mode.</p>
<p>* Insurers offer this option, but the annuity rate will be significantly lower. With bonds, you get one rate ^ and the principal back at all times.</p>
<p>^ This will be higher than immediate annuity policies for those retiring before ~ 65 (remember you can now normally exit the NPS before 60 if you were in the scheme for a minimum of 15 years). See: <a href="https://freefincal.com/i-need-a-pension-should-i-buy-an-annuity-or-a-govt-bond/">I need a pension: Should I buy an annuity or a government bond?</a></p>
<p><strong>2 A short-term debt fund option for retirees</strong></p>
<p>NPS has now transitioned into a post-retirement scheme, as subscribers can defer or withdraw the lump sum systematically up to age 85. Long-term gilt funds or corporate bonds are not well-suited for this, as they can be volatile, and a bond crash* can make this worse.</p>
<p>* Bonds crashed in July 2013 (ask AI about the Taper Tantrum), and the NPS realised that an exit at 60 will not work and staggered exit rules are necessary. This has now evolved to systematic withdrawals until age 85.</p>
<p>To facilitate this, a short-term debt fund for at least part of the corpus (accumulated pension wealth, as the regulator likes to put it) will moderate risk.</p>
<p>Ideally, the corpus of those who have stopped contributing after retirement should be transferred to separate funds. That is, funds in the accumulation phase and withdrawal phase are managed independently. But that would not be easy to implement practically at the moment. Perhaps, once more and more people retire regularly, it may be possible.</p>
<p>The post <a href="https://freefincal.com/my-nps-wishlist-two-changes-to-make-it-more-user-friendly/">My NPS Wishlist: two changes to make it more user-friendly</a> appeared first on <a href="https://freefincal.com">freefincal</a>.</p>
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		<post-id xmlns="com-wordpress:feed-additions:1">328971</post-id>			</item>