If you’re planning to invest in the National Pension System (NPS), there’s good news.
From October 1, pension fund management companies will introduce a new plan under which subscribers can invest up to 100% in equity.
This benefit will be available to all investors except government employees.
The Pension Fund Regulatory and Development Authority (PFRDA) has announced this scheme under the Multiple Scheme Framework (MSF).
Customized Retirement Schemes
The new MSF will provide tailored retirement solutions for NPS subscribers.
According to the PFRDA circular, each subscriber will be identified by their Permanent Account Number (PAN) at all Central Record-Keeping Agencies (CRAs).
This new framework will allow pension fund managers to design schemes based on the needs of subscribers.
Risk-Based Variants
The scheme will come in two main variants:
Moderate Risk
High Risk (with 100% equity investment option)
Currently, equity investment in NPS is capped at 75%, but this new plan raises the limit. Pension funds may also choose to offer low-risk plans.
Subscribers’ risk profiles will be determined based on social and economic factors, and each scheme will feature a risk-o-meter to show the level of risk clearly.
Vesting Period and Charges
The schemes must carry the “NPS” name along with a stated objective.
Minimum vesting period: 15 years.
Subscribers will receive the full amount at age 60 or on retirement.
Total charges will be capped at 30% of the annual Assets Under Management (AUM).
Launch on NPS Day
Experts believe the MSF will give investors more choice, flexibility, and control over their retirement savings.
It will also encourage innovation among pension funds and increase competition.
The MSF will officially launch on October 1, celebrated as NPS Day.
