The Pension Fund Regulatory and Development Authority (PFRDA) has approved several important policy reforms to further strengthen the National Pension System (NPS).
These reforms are aimed at expanding pension fund options, increasing competition, and protecting the interests of NPS subscribers.
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Banks Allowed to Set Up Pension Funds
PFRDA has given in-principle approval to scheduled commercial banks to independently set up pension funds and manage NPS deposits.
This move is intended to remove long-standing regulatory restrictions that earlier limited the role of banks in the pension fund sector.
Which Banks Will Be Eligible?
Not all banks will be allowed to sponsor pension funds. Only banks with strong financial health and systemic stability will qualify.
Eligibility will be evaluated based on factors such as net worth, market capitalization, and overall financial strength, in line with Reserve Bank of India (RBI) guidelines.
PFRDA will notify detailed eligibility criteria later, which will apply to both new and existing pension funds.
New Trustees Appointed to NPS Trust Board
To improve governance, PFRDA has appointed three new trustees to the NPS Trust Board after a selection process. These trustees are:
Dinesh Kumar Khara, former Chairman of State Bank of India (SBI)
Swati Anil Kulkarni, former Executive Vice President of UTI Asset Management Company
Arvind Gupta, co-founder of the Digital India Foundation
Dinesh Kumar Khara has also been appointed as the Chairperson of the NPS Trust Board.
Changes in Investment Management Fees
PFRDA has revised the Investment Management Fee (IMF) structure for pension funds. The new fee structure will come into effect from April 1, 2026.
Under this system, different fee rates will apply to government and non-government sector subscribers to better safeguard investor interests.
The revised fees will also apply to schemes under the Multiple Scheme Framework, with the corpus for each scheme calculated separately. However, the annual regulatory fee of 0.015 percent paid by pension funds will remain unchanged.
Purpose of These Reforms
According to PFRDA, these reforms are designed to make the NPS ecosystem more competitive, well-governed, and sustainable in the long run.
They aim to ensure a more secure retirement for subscribers from government, corporate, retail, and emerging workforce segments.