NPS Investors: The Pension Fund Regulatory and Development Authority (PFRDA) has approved several new reforms to make the National Pension System (NPS) more robust and sustainable. These reforms aim to increase options for subscribers (investors), introduce competition into the system, and ensure better protection of their interests. The PFRDA has, in principle, allowed scheduled commercial banks to independently open pension funds and manage the funds deposited in the NPS. This move is a departure from the old rules, which had previously limited the role of banks in this sector.
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Which Banks Will Be Eligible?
Not every bank will be granted this permission. Only those banks with a strong financial position and considered trustworthy will be able to sponsor pension funds. Eligibility will be assessed based on the bank’s net worth, market capitalization, and compliance with RBI regulations. Detailed criteria will be released later and will apply to both new and existing pension funds.
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New Trustees on the NPS Trust Board
To strengthen governance, the PFRDA has appointed three new trustees to the NPS Trust board. These include Dinesh Kumar Khara, former Chairman of SBI; Swati Anil Kulkarni, former Executive Vice President of UTI Asset Management; and Arvind Gupta, co-founder of the Digital India Foundation. Dinesh Kumar Khara has also been appointed as the Chairperson of the NPS Trust Board.
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Changes in Investment Management Fees
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The PFRDA has revised the Investment Management Fees (IMF) for pension funds. This new framework will come into effect from April 1, 2026. Separate fees have been set for government and private sector subscribers to better protect investors’ interests. This revised framework will apply to all schemes under the Multiple Scheme Framework. However, the annual regulatory fee of 0.015 percent paid by pension funds remains unchanged. The objective of these reforms:
According to PFRDA, all these reforms aim to make the NPS system more competitive, better governed, and sustainable in the long term. This will provide government, corporate, retail, and emerging workforce subscribers with a more secure and reliable future after retirement.