National Pension System (NPS) investors are set to get a clearer view of their investment choices.
The Pension Fund Regulatory and Development Authority (PFRDA) has introduced a new standardised framework for how NPS investment schemes will be classified, named and displayed.
The move is aimed at making it easier for subscribers to understand different NPS options and compare schemes offered by different pension funds.
PFRDA issued the new framework through a circular dated August 28, 2026.
What Has Changed for NPS Investors?
Under the new framework, NPS investment options will be broadly shown in five categories:
Lifecycle-based Schemes
Active Choice
NPS Sanchay
Multiple Scheme Framework (MSF)
4A Schemes
One of the biggest changes is for MSF schemes.
These schemes will now be grouped according to their equity exposure.
This will give investors a quick idea of how much equity risk a scheme can take.
NPS MSF Categories Explained
| Category | Equity Exposure | Risk Level |
|---|---|---|
| A – Aggressive Growth | 80%-100% | Very High Risk |
| B – High Growth | 60%-80% | High Risk |
| C – Balanced Growth | 35%-60% | Medium Risk |
| D – Conservative | 10%-35% | Lower Equity Exposure |
| E – Debt | 0%-10% | Lowest Equity Exposure |
PFRDA has also introduced a common naming format.
The scheme name will include the pension fund abbreviation, “NPS”, the category code and the scheme name.
For example, a scheme could be named “XYZ NPS A Retirement Scheme.”
For Tier 2 schemes, “Tier 2” will be added to the name.
This means Category A will indicate the highest equity exposure, while Category E will indicate the lowest.
Lifecycle NPS Schemes Will Still Adjust With Age
Not every investor wants to decide their asset allocation on their own.
For such subscribers, lifecycle-based NPS schemes will continue to automatically adjust investments according to age.
The allocation among equity, corporate bonds and government securities changes as the investor gets older.
There are four lifecycle options:
Aggressive
High
Moderate
Low
For example, Life Cycle 75 – High can have up to 75% equity exposure at younger ages. This gradually falls to 15% by age 55.
The Life Cycle 25 – Low option starts with a maximum equity exposure of 25% and reduces it to 5% by age 55.
What Is Active Choice in NPS?
Under Active Choice, investors decide how their NPS contributions should be divided among equity, corporate bonds and government securities.
However, the allocation must remain within PFRDA’s prescribed limits.
Equity can be allocated up to 75%, while corporate bonds and government securities can each be allocated up to 100%, subject to the applicable rules.
Investors Will See More Details Before Choosing a Scheme
Another major change is how NPS schemes will appear on investment platforms.
Before choosing a pension fund or scheme, subscribers will be able to see important details such as:
Scheme name
Pension fund
Launch date
Historical returns
Benchmark returns
Charges
Riskometer
Assets under management (AUM)
This should make it easier for investors to compare different schemes before making a decision.
PFRDA has also allowed subscribers to make up to two requests per financial year to change their pension fund, investment scheme or both.
What About NPS Charges?
The new framework also specifies charges for schemes other than 4A schemes.
For subscribers investing through a Point of Presence (PoP), PoP plus Investment Management Fund charges range from 0.24% to 0.32% of AUM per year.
For direct subscribers, the corresponding range is 0.04% to 0.12%.
Other charges, including CRA and NPST fees, may also apply. GST and other applicable taxes will be charged separately.
Government NPS Accounts Are Excluded
There is one important exception.
The new circular does not apply to NPS accounts tagged to the Government sector.
For other NPS subscribers, the new standardised framework is expected to make scheme names, risk levels and investment choices much easier to understand.
For investors, the biggest takeaway is simple: comparing NPS schemes should become clearer, especially when it comes to equity exposure and risk.
