NPS Reforms

The Pension Fund Regulatory and Development Authority (PFRDA) has introduced several policy reforms aimed at promoting sustainable growth for the National Pension Scheme (NPS).

• These reforms are expected to enhance the competitiveness, governance, and sustainability of the NPS ecosystem, benefiting subscribers by providing better long-term retirement outcomes and improving old-age income security.

Key Highlights of the reforms

1. Bank Participation in Pension Funds: The new framework allows Scheduled Commercial Banks (SCBs) to independently set up Pension Funds to manage NPS. 
   • This aims to enhance competition and strengthen the pension ecosystem. 
   • The framework addresses previous regulatory constraints that limited bank participation and ensures that only well-capitalized, robust banks are eligible to sponsor Pension Funds, based on criteria like net worth and market capitalization, in line with RBI norms.
     
2. Appointment of New Trustees: PFRDA has appointed three new Trustees to the Board of NPS Trust.
   
3. Revised Investment Management Fee (IMF): The IMF structure for Pension Funds has been revised, effective from April 1, 2026. 
   • The new structure introduces differentiated rates for Government and Non-Government sector subscribers, aiming to better align with international benchmarks and subscriber needs. 
   • For the Non-Government sector, the IMF rates are tiered based on the Assets Under Management (AUM) as follows:
     1. Up to ₹25,000: 0.12%
     2. Above ₹25,000 & Up to ₹50,000: 0.08%
     3. Above ₹50,000 & Up to ₹1,50,000: 0.06%
     4. Above ₹1,50,000: 0.04%
4. Annual Regulatory Fee and Outreach: The Annual Regulatory Fee (ARF) of 0.015% remains unchanged. 
   • Additionally, 0.0025% of the AUM will be directed to the Association of NPS Intermediaries (ANI) to fund outreach and financial literacy initiatives, supporting the growth and awareness of NPS.

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About Pension Fund Regulatory & Development Authority

• PFRDA is an authority set up by the Government of India through the PFRDA Act 2013 
• To promote old age income security by establishing, regulating and developing pension funds to protect the interest of subscribers to schemes of pension funds.

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