The National Pension System (NPS) is set to undergo major changes from October 1, 2025. Non-government sector NPS subscribers will now be allowed to invest up to 100% in equity in a single scheme.
India’s pension fund regulator PFRDA has also introduced a mechanism Multiple Scheme Framework (MSF), under which it will now allow non-government NPS subscribers to invest in multiple schemes under one PAN.
“This framework has been developed under the enabling provisions of Section 20(2) of the PFRDA Act, 2013, which permits subscribers to access multiple schemes under the NPS,” the PFRDA said in a statement.
The reform, the regulator says, is a significant step forward in expanding the outreach of NPS in the non-government sector (NGS). It allows greater flexibility, more personalised retirement solutions, and alignment with global best practices in pension system design, the statement added.
Key features of the MSF
The framework is built upon a new architecture where a subscriber, identified uniquely through a PAN (Permanent Account Number) across Central Recordkeeping Agencies (CRAs), will be able to hold and manage multiple schemes within the NPS through PRAN at each CRA.
This is a departure from the earlier structure, where a subscriber could operate only a single investment choice per tier and be associated with one CRA. By enabling multiple schemes under one identity of PAN, the framework removes constraints
on diversification and provides subscribers with a greater scope for aligning their investments with their evolving retirement and wealth-building goals, the PFRDA said.
This feature will be available through all CRAs — such as CAMS, Protean, and KFintech. Previously, this option was limited to just one scheme per tier per CRA.
New options for investors
Under the MSF, each scheme will have at least two variants—one moderate and one high-risk.
The circular clearly states that each scheme may have at least two variants, one moderate and one high-risk, with equity allocation allowed up to 100% in the high-risk category.
This means that investors will now be able to choose between moderate and high-risk options based on their risk appetite.
Pension funds (PFs) have also been given the freedom to create schemes for different types of investors—such as self-employed professionals, digital economy workers, or corporate employees with employer co-contribution.
Support at different life stages
Investors are typically more risk-averse early in their careers. However, as they age, they begin to prefer safer investments.
Benchmarks and transparency
Each scheme will be benchmarked against a relevant market index — such as an equity index, bond index, or composite benchmark — to ensure transparent performance.
Tier-1 and Tier-2 Accounts
These rules will apply to both existing and new subscribers.
Tier-1 Account: Retirement-focused and has a mandatory vesting period.
Tier-2 Account: Voluntary, with an optional vesting period.
According to the circular, a minimum vesting period of 15 years is required to switch investments from one scheme to another within the MSF.
The circular states: “PFs may also, at their discretion, introduce low-risk variants.”
Switching rules
If a subscriber is dissatisfied with their current scheme, they can switch. However, switching before the completion of the 15-year vesting period is possible only within common schemes (old schemes).
After completion of 15 years, investors will be able to freely move between different MSF schemes.