NPS investors are in for a treat! Pension fund options expand, fees lower

There's good news for millions of people who invest in the National Pension System (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) has approved several major reforms to make the NPS more robust, reliable, and investor-friendly. These changes will directly benefit NPS subscribers, whether they are government employees, private sector employees, or retail investors.

Until now, the scope of pension fund management within the NPS was limited. However, under a new decision, the Pension Fund Regulatory and Development Authority (PFRDA) has, in principle, permitted banks to establish pension funds. 

This means that in the future, even the country's largest and strongest banks will be able to manage NPS deposits. This clearly means that investors will have more options than before. With more options, competition will increase, and with increased competition, services will improve.

Not every bank will get approval

However, this facility is not available to every bank. The Pension Fund Regulatory and Development Authority (PFRDA) has clarified that only banks with strong financial standing and fully complying with Reserve Bank regulations will be able to sponsor pension funds. 

A bank's eligibility will be determined based on its net worth, market value, and overall financial strength. Detailed terms and conditions will be issued separately soon, applicable to both new and existing pension funds.

NPS Trust Board gets new leadership

To further strengthen the governance of the NPS, the PFRDA has appointed three experienced and trusted names to the Trust Board. These include Dinesh Kumar Khara, former Chairman of SBI, Swati Anil Kulkarni, former senior executive of UTI AMC, and Arvind Gupta, co-founder of the Digital India Foundation. 

Dinesh Kumar Khara has also been appointed the new Chairperson of the NPS Trust Board. This is expected to further strengthen the management and monitoring of investors' funds.

Control over fees for investors

The Pension Fund Regulatory and Development Authority (PFRDA) has also made significant changes to the investment management fees for pension funds. 

This new fee structure will be effective from April 1, 2026. Separate fees will now be set for government and non-government sector investors, ensuring the protection of all segments. 

The corpus of each scheme under the multiple scheme framework will be considered separately. However, the regulatory fee of 0.015 percent for pension funds will remain the same.

What will be the benefit to common investors?

All these reforms are aimed at making the NPS more transparent, competitive, and sustainable in the long run. More pension fund options, improved governance, and controlled fees will directly impact investors' retirement savings. This will provide a more secure future for government employees, private employees, the self-employed, and the young workforce.

Investment