Coming soon: Much larger spread for NPS subscribers

Mumbai: Individuals with an NPS account will soon be able to spread their retirement savings across multiple schemes instead of sticking to a single option. The Pension Fund Regulatory and Development Authority (PFRDA) has rolled out a Multiple Scheme Framework (MSF) for non-government sector subscribers.

The move is significant for corporate employees, professionals, self-employed individuals and platform workers who form the bulk of non-government NPS participants. Until now, most subscribers could invest only in Tier 1 and Tier 2 accounts, with limited active or auto choice under Tier 1. Under MSF, pension fund managers will be allowed to design new schemes beyond this structure, including products targeted at specific groups such as women, young professionals or different age cohorts.

"The new framework gives subscribers more flexibility-whether through schemes tailored for specific age groups, the option to exit after 15 years, or even 100% equity exposure for younger investors," said Sriram Iyer, MD & CEO of HDFC Pension Fund. The framework is backed by Section 20(2) of the PFRDA Act, 2013, which permits multiple schemes under one pension account.

Among the key changes is the introduction of a minimum 15-year vesting period. While NPS was earlier tied to superannuation at 60, investors will now be able to exit at 50 or 55, providing liquidity much before retirement, though they can stay invested up to 60 or even 75. The regulator has also lifted the 75% cap on equity allocation, paving the way for schemes with 100% equity exposure. This is expected to appeal to younger investors who already hold fixed income via provident fund and may prefer full equity allocation in their NPS portfolio. Charges have been rationalised too. Iyer added that the pension character of the NPS remains intact despite the new flexibility.