PFRDA opens NPS pension fund sponsorship to banks, revises fee structure
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SCBs to independently set up pension funds; new trustees appointed to NPS Trust board
New Delhi, Jan 1: The Pension Fund Regulatory and Development Authority has approved a set of policy reforms aimed at strengthening the National Pension System by widening participation, enhancing competition and improving long-term retirement outcomes for subscribers.
In a key move, the PFRDA Board has given in-principle approval to a framework that will allow Scheduled Commercial Banks to independently sponsor and set up pension funds to manage NPS assets. The decision removes long-standing regulatory constraints that had limited bank participation in the sector.
According to the regulator, the proposed framework introduces clearly defined eligibility criteria based on net worth, market capitalisation and prudential soundness, aligned with Reserve Bank of India norms. The criteria, to be notified separately, will apply to both new and existing pension funds and are intended to ensure that only well-capitalised and systemically robust banks enter the pension fund space.
The regulator said the reform would strengthen the pension ecosystem, enhance competition among pension fund managers and safeguard subscriber interests.
New trustees for NPS Trust
PFRDA has also appointed three new trustees to the Board of the NPS Trust following a selection process initiated by the authority. The new trustees are Dinesh Kumar Khara, former chairman of State Bank of India; Swati Anil Kulkarni, former executive vice president of UTI Asset Management Company; and Arvind Gupta, co-founder and head of Digital India Foundation and a member of the National Venture Capital Investment Committee under the SIDBI-managed Fund of Funds Scheme.
Khara has been designated as chairperson of the NPS Trust Board.
Investment management fee revised
To align the NPS with evolving market realities, public aspirations and international benchmarks, PFRDA has revised the Investment Management Fee structure for pension funds, effective April 1, 2026. 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 counted separately.
The IMF for government sector employees under the composite scheme, auto choice and Active Choice G-100 remains unchanged. For non-government sector subscribers, the IMF will range from 0.12 per cent for assets under management of up to Rs 25,000 crore to 0.04 per cent for AUM above Rs 1.5 lakh crore.
Outreach funding for ANI
The annual regulatory fee of 0.015 per cent payable by pension funds to PFRDA will continue without change. Of this, 0.0025 per cent of AUM will be passed on to the Association of NPS Intermediaries to support coordinated awareness, outreach and financial literacy initiatives under PFRDA’s overall guidance.
PFRDA said the reforms are expected to help subscribers and stakeholders access a more competitive, well-governed and resilient NPS ecosystem, supporting improved retirement outcomes and stronger old-age income security as formalisation in India’s financial and pension sectors continues to expand.
