M.S. Sahoo Committee

Context

The Pension Fund Regulatory and Development Authority (PFRDA) constituted a 15-member high-level expert committee chaired by M.S. Sahoo (former Chairperson, IBBI). The committee has been formed to design a regulatory and operational framework for assured pension payouts under the National Pension System (NPS), marking a shift from a purely market-linked pension model towards predictable retirement income.

About the News

Purpose:
To create a structured system for assured/guaranteed pension payout products under NPS.

Nature of Committee:

15-member panel
Experts from law, actuarial science, finance, insurance, and academia
Constituted as a Standing Advisory Committee on structured pension payouts

Core Vision:
Aligned with “Viksit Bharat 2047” to ensure financial independence, dignity, and stable income security for citizens in old age.

Primary Mandate:
To transform NPS from a “savings-only” product into a reliable lifelong income system through legally enforceable, market-based guarantees.

Key Terms of Reference (ToR)

Framework Development
- Draft regulations for assured payout products
- Explore schemes suggested in PFRDA’s Sept 2025 consultation paper, including:
  - Minimum Assured Return Scheme (MARS)
Seamless Transition (Accumulation → Decumulation)
- Ensure smooth movement from:
  - Accumulation phase (saving/investing)
  - Decumulation phase (pension payouts)
Operational Standards to be Defined
- Lock-in periods: Minimum investment duration to qualify for assurance
- Pricing mechanism: Cost of “assurance” to the subscriber
- Withdrawal limits: Partial withdrawal rules to protect guaranteed payouts
- Risk management: Capital + solvency norms for long-term payout ability
- Taxation & legal clarity: Tax treatment of assured payouts inside NPS
- Consumer protection:
  - Standard disclosures
  - Prevention of mis-selling
  - Clarity between fully guaranteed vs market-linked protection

Comparison: Current NPS vs Proposed Assured Payout Framework

Feature	Current NPS (Market-Linked)	Proposed Assured Payout Framework
Returns	Depends on market performance (Equity/Debt)	Predictable minimum return / assured pension
Risk	Fully borne by subscriber	Risk partly shared via provider/reserve mechanism
Exit Rule	40% annuity purchase compulsory at retirement	Scope for structured, hybrid, phased payouts
Predictability	Uncertain pension amount	Higher clarity on target income (e.g., ₹50,000/month)

Significance

Addresses Market Volatility Risk:
Protects retirees from a market crash just before retirement (a major criticism of NPS).
Boosts Financial Inclusion:
Encourages participation from private sector workers and self-employed, who prefer “defined benefit-like” certainty.
Strengthens Social Security:
Critical for India’s aging population as the number of senior citizens is projected to double by 2050.

Conclusion

The M.S. Sahoo Committee marks a major shift in India’s pension reforms. By enabling assured payouts under NPS, PFRDA aims to combine market-based growth with retirement income certainty, improving pension coverage, stability, and long-term financial security for India’s workforce.

M.S. Sahoo Committee