The Pension Fund Regulatory and Development Authority (PFRDA) has issued a fresh circular clarifying how charges will apply to subscribers under the National Pension System (NPS) and related schemes. The new clarifications will come into effect from July 1, 2026.
The regulator said the move is aimed at bringing more clarity and uniformity in how Central Recordkeeping Agencies (CRAs) levy charges.
AMC for Tier I and Tier II: What changes
One of the key clarifications relates to Annual Maintenance Charges (AMC).
PFRDA said that AMC for Tier II accounts will now be aligned with Tier I accounts under the same sector (government or private). However, there is relief for small investors.
“No AMC shall be levied… where the corpus in such [Tier II] account is up to ₹1,000, as at the end of a quarter.” This means if your Tier II balance stays at ₹1,000 or below, you won’t be charged AMC.
Separate AMC for each scheme under same PRAN
The circular also makes it clear that even if you have a single PRAN (Permanent Retirement Account Number), each scheme will be treated as a separate account.
“Each pension scheme maintained within a PRAN shall be treated as a separate account… and each such account shall attract AMC separately.”
So, if you hold multiple schemes under one PRAN, charges may apply separately to each.
Big relief for dormant accounts
There is a notable concession for inactive subscribers. If your account becomes dormant (no contribution for 4 consecutive quarters). You will be charged only 10% of the normal AMC.
“In respect of dormant account, the AMC shall be levied at 10% of the applicable AMC,” the circular said.
What is a dormant account?
PFRDA defines it clearly: “An account where no contribution is received for four consecutive quarters…”
Such accounts will be marked dormant in the first week of the next quarter, and the reduced charges will apply until the account becomes active again.
PRAN opening charges: No extra fee for additional accounts
The regulator has also clarified charges related to PRAN:
PRAN opening charge will apply only once, at the time of initial creation.
If you open or activate additional accounts (Tier I or Tier II) under the same PRAN, no extra charge will be levied.
“For activation/opening of each account… within an existing PRAN, the charge shall be NIL.”
Zero AMC for some schemes
PFRDA has also provided relief for certain low-balance accounts:
No AMC will be charged for zero-balance accounts under: Atal Pension Yojana (APY) and NPS-Lite
How and when charges will be collected
The circular states that charges will be collected at the end of each quarter:
Either billed to the employer (if they bear the cost), or deducted directly from the subscriber’s account
“The applicable charges shall be collected… at the end of each quarter… or through unit deduction from the subscriber’s account,” the PFRDA circular said.
What stays unchanged
PFRDA clarified that all other provisions from its earlier circular dated September 15, 2025, will continue without any change.
Why this matters for NPS subscribers
In simple terms, these clarifications bring better transparency in how charges are applied, relief for small and inactive investors, and clarity on multiple accounts under one PRAN.
For subscribers, especially those with multiple schemes or dormant accounts, this could reduce confusion and, in some cases, lower charges.
Disclaimer:
This article is for informational purposes only and is based on the circular issued by the Pension Fund Regulatory and Development Authority. Readers should verify details from official sources or consult a financial advisor before making any investment or retirement planning decisions.