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PFRDA plans major NPS changes, proposing three new pension schemes for flexibility and assured benefits. Feedback on the consultation paper is open until October 31, 2025.
National Pension Scheme (NPS) is managed by PFRDA.
The Pension Fund Regulatory and Development Authority (PFRDA) is planning to make major changes in the National Pension Scheme (NPS) with a proposal to add three new pension schemes to cater to the growing demand for flexibility, assured benefits, and predictable retirement income. The regulator has released a consultation paper, seeking feedback from stakeholders, including subscribers, pension funds, industry experts, and the general public, by October 31, 2025.
What Are Three Pension Schemes Proposed In Paper?
The regulator noted that while the existing NPS offers transparency and growth, it leaves gaps regarding corpus adequacy and income predictability, particularly amid market volatility and increasing life expectancy.
To bridge these concerns, PFRDA has outlined three options:
Pension Scheme-1 – A non-assured plan combining a step-up Systematic Withdrawal Plan (SWP) with an annuity. Subscribers can define a “Desired Pension,” with payouts rising annually for 10 years before switching to annuities.
Pension Scheme-2 – An assured scheme offering a “Target Pension” with annual inflation adjustments based on CPI-IW. It incorporates a cost-neutral contribution model with a 10% buffer to safeguard against underfunding.
Pension Scheme-3 – A novel “Pension Credits” system where each credit guarantees a fixed monthly payout of Rs 100 for a set period. The model simplifies retirement planning, aligns with goal-based investing, and may eventually enable trading of credits in a regulated secondary market.
The consultation paper focuses on risk management strategies such as liability-driven investments, balanced life-cycle patterns, and actuarial assessments to ensure long-term sustainability.
NPS MSF Becomes Effective From Oct 01
The consultation paper came just days after the government introduced Multiple Scheme Framework (MSF) under NPS from October 01, allowing non-government subscribers to opt for 100% equity exposure option.
The reform, introduced under Section 20(2) of the PFRDA Act, 2013, will allow subscribers such as corporate employees, professionals, self-employed individuals, and gig economy workers to access and manage multiple schemes under a single Permanent Account Number (PAN). Earlier, subscribers could operate only one investment choice per tier.
Earlier, they had the option to choose one investment per tier, which now leads to greater diversification and personalization.
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
October 04, 2025, 09:51 IST
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