The Pension Fund Regulatory and Development Authority (PFRDA) has approved a series of policy reforms aimed at strengthening the National Pension System (NPS), enhancing competition and safeguarding subscriber interests, the regulator said on Thursday.
In a key decision, the PFRDA Board has given in-principle approval to a framework that will allow Scheduled Commercial Banks (SCBs) to independently set up Pension Funds (PFs) to manage NPS assets. The move is expected to deepen the pension ecosystem by widening participation and increasing competition.
The framework addresses earlier regulatory constraints that had limited bank participation and introduces clearly defined eligibility criteria based on net worth, market capitalisation and prudential soundness in line with Reserve Bank of India norms. Detailed eligibility criteria will be notified separately and will apply to both new and existing pension funds.
The regulator also announced the appointment of three new trustees to the board of the NPS Trust following a selection process initiated by PFRDA.
The new trustees are Dinesh Kumar Khara, former Chairman of State Bank of India; Swati Anil Kulkarni, former Executive Vice President of UTI AMC; and Dr Arvind Gupta, Co-Founder and Head of the Digital India Foundation and a member of the National Venture Capital Investment Committee under the SIDBI-managed Fund of Funds Scheme.
Khara has also been designated as the Chairperson of the NPS Trust Board.
In another significant reform, PFRDA has revised the Investment Management Fee (IMF) structure for Pension Funds, effective April 1, 2026, to align with evolving market realities, international benchmarks, and the objective of expanding NPS coverage across corporate, retail, and gig-economy segments. The revised slab-based IMF introduces differentiated rates for government and non-government sector subscribers and will also apply to schemes under the Multiple Scheme Framework, with MSF corpus being counted separately.
The IMF for government sector employees under the Composite Scheme and for those opting for Auto Choice and Active Choice G 100 schemes remains unchanged.
For Non-Government Sector subscribers, the IMF will range from 0.12 per cent for assets under management (AUM) up to Rs 25,000 crore to 0.04 per cent for AUM above Rs 1.5 lakh crore.
The Annual Regulatory Fee of 0.015 per cent payable by pension funds to PFRDA will continue unchanged. Of this, 0.0025 per cent of AUM will be passed on to the Association of NPS Intermediaries (ANI) to support coordinated awareness, outreach and financial literacy initiatives under PFRDA’s overall guidance.
The PFRDA said the reforms are expected to help subscribers and stakeholders gain access to a more competitive, well-governed, and resilient NPS ecosystem, leading to improved long-term retirement outcomes and enhanced old-age income security as formalisation in the financial and pension sectors continues to expand.