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Pension Fund Regulatory and Development Authority (PFRDA) | Ministry of Finance | Reserve Bank of India (RBI) | NPS Trust
The Pension Fund Regulatory and Development Authority (PFRDA) has approved a sweeping set of policy reforms on January 1, 2026, designed to deepen the National Pension System (NPS) ecosystem and enhance long-term retirement outcomes for Indian citizens. A cornerstone of these reforms is the Multiple Scheme Framework (MSF), which transforms the NPS from a single-strategy model into a highly personalized investment platform. It directly supports the three strategic pillars: widening institutional participation, strengthening fiduciary governance, and aligning fee structures with global benchmarks.
Key structural and regulatory highlights include:
Banking Sector Integration: In a major shift, Scheduled Commercial Banks (SCBs) are now permitted to independently set up Pension Funds (PFs) to manage NPS assets. This move removes previous regulatory constraints and introduces strict eligibility criteria based on net worth, market capitalization, and prudential soundness in line with RBI norms.
Governance Overhaul: The PFRDA has reconstituted the NPS Trust Board by appointing three new trustees: Dinesh Kumar Khara (former SBI Chairman) as Chairperson, Swati Anil Kulkarni (former UTI AMC EVP), and Dr. Arvind Gupta (Digital India Foundation).
Revised Fee Structure: Effective April 1, 2026, a new slab-based Investment Management Fee (IMF) structure will be introduced to safeguard subscriber interests. For non-government sector subscribers, fees will range from 0.12% for AUM up to ₹25,000 crore, tapering down to 0.04% for AUM above ₹1.5 lakh crore.
Outreach and Literacy: While the Annual Regulatory Fee remains at 0.015%, a specific portion (0.0025% of AUM) will now be channelled to the Association of NPS Intermediaries (ANI) to fund coordinated financial literacy and outreach programs.
Expanded Coverage: The reforms specifically target the expansion of NPS into corporate, retail, and gig-economy segments, reflecting the mobility of the modern Indian workforce.
What is the Multiple Scheme Framework (MSF)? It is a structural option within the NPS that allows subscribers to manage different investment schemes—such as aggressive equity-heavy portfolios alongside stable debt-heavy cores—under a single account. The recent reforms ensure that the revised IMF structure also applies to MSF, with the corpus of each scheme being counted separately to determine the applicable fee slab.
Policy Relevance
These reforms mark a “strategic evolution” in India’s pension architecture, moving away from a restricted management pool to a highly competitive and well-governed market. By allowing robust banks to sponsor pension funds, the government is leveraging existing employer and payroll networks to bridge the massive gap in pension penetration among MSMEs and the gig workforce. Furthermore, recent amendments already allow subscribers to remain invested until 85 years of age and have reduced the compulsory annuitization from 40% to 20%, significantly improving cash-flow flexibility at retirement.
Relevant Question for Policy Stakeholders: How will PFRDA coordinate with the RBI to ensure that the entry of Scheduled Commercial Banks into pension fund management does not lead to ‘concentration risk’ or systemic contagion between the banking and pension sectors during periods of financial stress?
Follow the full news here: PFRDA Introduces Policy Reforms to Promote Sustainable Growth of NPS