The pension regulator, Pension Fund Regulatory and Development Authority (PFRDA), has announced major reforms to strengthen India’s pension system.
These changes aim to make the National Pension System (NPS) more accessible, competitive, and secure for subscribers.
The reforms come at a time when more people are joining the formal financial system and planning for long-term retirement security.
Banks Can Now Run Pension Funds
One of the biggest changes is that scheduled commercial banks will now be allowed to set up and manage their own pension funds under the NPS.
Earlier, strict rules limited how banks could participate in pension fund management.
Under the new framework, these barriers will be removed.
This move is expected to increase competition, improve service quality, and better protect the interests of NPS subscribers.
Clear Rules for Bank Participation
PFRDA will introduce clear eligibility criteria for banks that want to run pension funds.
These criteria will be based on factors such as net worth, market capitalisation, and overall financial strength, in line with RBI guidelines.
The rules will apply equally to both new and existing pension funds.
According to the government, this step will deepen the pension market and improve governance standards across the system.
Changes in Pension Fund Fees from 2026
To match global best practices and changing market conditions, PFRDA has revised the investment management fee structure.
The new slab-based fee system will come into effect from April 1, 2026.
For non-government NPS subscribers, higher assets under management will attract lower fees.
However, the fee structure for government employees under select schemes will remain unchanged.
Focus on Retirement Security
The annual regulatory fee payable to PFRDA will continue at 0.015 percent of assets under management.
A portion of this amount will be used to support financial literacy and awareness programs through the Association of NPS Intermediaries.
According to PFRDA, these reforms will make the NPS more flexible, transparent, and well-governed, helping citizens build stable income and financial security for their retirement years.
