Pension Scheme New Rule: What is the multiple scheme framework in pension NPS? Applications are open from October 1st..

The National Pension System (NPS) is a popular retirement savings scheme in India, in which millions of people invest their money. Now, a major change is about to take place in the NPS. The Pension Fund Regulatory and Development Authority (PFRDA) is introducing a new rule called the Multiple Scheme Framework (MSF). This will come into effect on October 1, 2025. Subscribers other than government employees (such as corporate employees, gig workers, and professionals) will have more options. So, let's understand in simple Hindi what the MSF is, what changes will occur, and what benefits it will provide.

What is NPS?

The National Pension System (NPS) is a self-selected investment scheme of the Government of India that provides pensions to citizens after retirement. It is administered by the PFRDA and has two types of accounts: Tier-I (for pensions) and Tier-II (for voluntary investments).

What is the Multiple Scheme Framework (MSF)?

MSF means that non-government sector subscribers (such as those with private jobs, freelancers, gig workers) will now be able to invest in multiple schemes under a single PAN or PRAN (Permanent Retirement Account Number). Previously, a PRAN only held one scheme, but now you can choose from multiple schemes and distribute your funds.

This framework will make NPS more personalized and flexible. Pension Fund Managers (PFMs) will be able to launch new schemes, such as one for corporate employees and one for gig workers. Each scheme will have at least two variants: moderate risk and high risk. The high-risk variant will allow up to 100% equity allocation.

What changes will happen from October 1, 2025?

Multiple Schemes: A single PRAN will now hold multiple schemes. You can manage them through different Central Recordkeeping Agencies (CRAs) such as CAMS, Protean, or KFintech.

100% Equity: In high-risk schemes, your entire corpus can be invested in the stock market.

New Schemes: Pension funds will be able to launch new schemes, but PFRDA approval is required. Each scheme will be benchmarked against a market index.

Fee Cap: Annual fees will not exceed 0.30%. Funds bringing in new investors will now receive a 0.10% incentive.

Scheme Essentials Document: Each scheme will have a standard document detailing its objectives, risks, fees, switching rules, and more.

Older schemes will be referred to as "common schemes." Switching will only be possible after a 15-year vesting period or upon normal exit. Exit rules remain the same: 60% must be invested in a mandatory annuity upon retirement.

Advantages of MSF
More Options: You can choose a scheme based on your risk appetite. Gig workers or professionals will have personalized options.

Better returns: Opportunity to earn more than 100% equity, but also higher risk.

Transparency: Benchmarking and documentation will ensure clarity.

Low fees: A 0.30% cap will reduce expenses.

Inclusiveness: Will make NPS more attractive to the gig economy and private sector.

Some challenges

Risk: High-equity schemes may suffer losses due to market declines.

Switching limit: Switching is possible only after 15 years, so choose carefully.

PFRDA approval: Approval of new schemes may take time.

How to join NPS?

Eligibility: Indian citizens (including NRIs) aged 18-70, not HUFs or PIOs.

Process: Register on the CRA portal, complete KYC, and open Tier-1 (retirement) and Tier-2 (voluntary) accounts.

Tax benefits: Up to ₹1.5 lakh exemption under Section 80C.

Last but not least,
The implementation of MSF in NPS from October 1, 2025, will provide greater flexibility and choice to non-government subscribers. Multiple schemes in a single PRAN, 100% equity options, and lower fees will simplify retirement planning. However, invest with an understanding of the risks. If you are in NPS, take advantage of the new rules. (Note: This news is based on general information.)

Disclaimer: This content has been sourced and edited from Zee Business. 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.