The Pension Fund Regulatory and Development Authority (PFRDA) has announced important changes to make the National Pension System (NPS) more accessible, competitive, and secure.
The reforms, approved recently, aim to improve governance, expand access, and protect the interests of subscribers as India’s financial sector becomes more formalized.
One of the key changes is that scheduled commercial banks (SCBs) can now set up their own pension funds and directly manage NPS accounts.
According to the Finance Ministry, this will increase competition and give customers more choices, while removing regulatory barriers that previously limited bank participation.
How the System Will Work for Banks
Earlier, certain rules prevented banks from participating widely as NPS fund sponsors.
Under the new framework, banks must meet eligibility criteria such as net worth, market capitalization, and financial strength, following Reserve Bank of India regulations.
These criteria will apply to both new and existing pension funds.
By allowing banks to actively manage NPS funds, the government expects the pension market to grow, competition to rise, and protections for subscribers to improve.
Changes to Fees and Retirement Benefits
PFRDA is also revising the investment management fees (IMF) for pension funds from April 1, 2026.
The new system will have different rates for government and non-government clients.
For non-government subscribers, higher fund balances will attract lower fees, while fees for government employees under certain schemes will stay the same.
The annual regulatory fee to PFRDA remains at 0.015% of assets under management (AUM).
Part of this fee will support financial literacy and outreach programs through the Association of NPS Intermediaries.
These reforms are expected to make NPS more competitive, flexible, and better governed.
Over time, they should improve retirement savings and provide more secure income for Indian citizens in old age.
