Investment: NPS funds can be invested entirely in equity, with the facility available from October 1..

The Pension Fund Regulatory and Development Authority (PFRDA) has announced the introduction of a Multiple Scheme Framework (MSP) for non-government sector subscribers under the National Pension System (NPS). This facility will be effective from October 1, 2025. Schemes with 100% equity exposure will now be available. Introduced to provide subscribers with greater flexibility, broader investment options, and customized retirement planning, the MSF will allow NPS account holders to spread their retirement savings across multiple schemes instead of focusing solely on a single option.

This move is significant for corporate employees, professionals, and the self-employed, who constitute a significant portion of non-government NPS participants. According to an official PFRDA notification, this new system is a significant change from the existing framework, where subscribers were allowed to choose only one investment option at each level.

More Options
Until now, most subscribers could only invest in Tier 1 and Tier 2 accounts. Even Tier 1 had limited options, such as Active or Auto Choice. Now, under the MSF, pension fund managers will be able to design new schemes. These will include specialized products for women, young professionals, and investors of different age groups. The most significant change is the 15-year minimum vesting period.

Previously, NPS was linked to superannuation at 60 years, but now investors can exit at 50 or 55 years. If they wish, they can continue investing until 60 or 75. The regulator has also removed the 75% equity allocation limit, allowing schemes with 100% equity exposure. This will especially benefit young investors who already have a fixed income through their provident fund and may prefer to have a fully equitable NPS portfolio.

What are experts saying?
Shriram Iyer, MD and CEO of HDFC Pension Fund, said that the new framework includes the option of age-based exit from the scheme after 15 years or 100% equity exposure for young investors. This will make NPS more attractive for retirement planning. This framework has been introduced under the PFRDA Act 2013, which allows holding multiple schemes under a single pension account.

Essential safeguards remain the same. Accounts will be portable, 40% of the corpus will have to be converted into annuity at the time of exit to provide lifetime income, and pension funds will have to comply with prudential investment regulations. Risk and return information will also have to be disclosed transparently.

Disclaimer: This content has been sourced and edited from Navbharat Times. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.