According to Charu Pahuja, CFP CM and Group Director & COO at Wise Finserv, retirement planning does not end with wealth accumulation.
“The real challenge begins at retirement. It is not just about how much you have saved, but how that money turns into a steady income for the next twenty or thirty years,” she says.
From lump sum to structured income
Pahuja points out that many retirees still prefer withdrawing a large portion of their savings upfront, but that approach may not always work in the long run. Instead, the National Pension System (NPS) offers a more structured way to manage retirement income.
One such feature is the Systematic Lump Sum Withdrawal (SLW) option, which allows retirees to withdraw money periodically—monthly, quarterly or otherwise—while keeping the remaining corpus invested. This ensures that a part of the portfolio continues to grow even after retirement, alongside regular withdrawals.
She also highlights that NPS provides flexibility to continue withdrawals up to the age of 85, allowing retirees to better pace their income instead of making large, one-time decisions early on.
How the NPS structure shapes income
At retirement, NPS requires a mix of lump sum withdrawal and annuity purchase, and this differs across categories.
For non-government subscribers, up to 80% of the corpus can be withdrawn, with a minimum 20% allocated to annuity. For government employees, 60% can be withdrawn, while 40% must go into annuity.
Explaining the implications of this structure, Pahuja notes that the allocation directly impacts post-retirement income. A higher annuity provides stability but reduces flexibility, while a larger withdrawal offers control but requires disciplined management.
Where annuities fit in
While market-linked strategies offer growth, annuities provide predictable income—an aspect many retirees rely on.
Sharad Chand, Business Head – Wealth Management at Alankit, says annuities play a crucial role despite not being high-return products. “It’s not flashy, but it does what it’s supposed to do—to keep money coming in,” he notes.
He adds that investors can choose from multiple annuity options based on their priorities, whether it is higher immediate payouts, income for a spouse, or leaving a legacy. “There’s no perfect option, it depends on individual needs,” Chand says.
The role of compounding in NPS
Beyond income structuring, NPS also plays a key role in building the retirement corpus itself.
Siddharth Maurya, Managing Director at Vibhavangal Anukulkara, highlights that the system allows investments across equities, corporate debt, and government securities, enabling long-term compounding.
“The strength of NPS lies in value compounding over time, particularly through equity exposure, which helps build a larger retirement corpus,” he says.
Maurya adds that starting early, contributing consistently, and aligning asset allocation with risk appetite can significantly improve pension outcomes. He also notes that combining NPS with other retirement solutions can further strengthen income security.
Balancing stability and flexibility
Experts agree that retirement planning is not just about returns, but about managing key risks—outliving savings, inflation, and market volatility.
A combination of annuity income and systematic withdrawals helps address these challenges by offering both stability and flexibility.
The focus should not be on one-time payouts but on ensuring that “income continues, quietly and consistently, for years to come.”