NPS Rules- The Pension Fund Regulatory and Development Authority (PFRDA) has made a major change to the National Pension System (NPS). From October 1, 2025, non-government NPS subscribers will be able to invest 100% of their entire pension amount in equity-related schemes. Previously, the equity investment limit was 75%, but this new rule will remove this limit. The purpose of this change is to give subscribers more freedom and allow them to better plan their retirement savings based on their age, needs, and risk appetite.
Now you can invest in more than one scheme
Until now, NPS investors had to choose only one type of scheme, whether it was a Tier 1 or Tier 2 account. They had to choose between AutoChoice and ActiveChoice and invest the entire amount accordingly. However, with the introduction of the new MSP (Multiple Scheme Framework), subscribers will be able to divide their pension amount across different schemes.
This means they can divide their investment amount according to their age, risk tolerance, and needs. For example, a young investor might invest their entire corpus in equities (stock market) to achieve higher returns. Those with a lower risk appetite can invest a larger portion of their corpus in debt funds or balanced funds, ensuring their investments remain safe.
Previously, the age limit for investing in NPS was 60 years. This meant that deposits could only be made until the age of 60. However, this rule has now been changed. Subscribers can now withdraw their pension funds at the age of 50 or 55. If someone wishes to continue investing, they can also make deposits from the age of 60 to 75. These changes will be especially beneficial for professionals, self-employed individuals, or those working in the corporate sector. Their needs and planning often vary. Now, they will have complete freedom to plan their pension savings based on their age, work schedule, and future needs.
Shriram Iyer, MD and CEO of HDFC Pension Fund, believes that this new framework will make NPS even more attractive for retirement planning. He said that the option to invest 100% in equities and the ability to withdraw funds after 15 years will be especially beneficial for young investors. Shriram Iyer also explained that all these changes are being made under the PFRDA Act 2013.
Security will remain the same
Although new investment options are being offered in NPS, security rules will remain the same. Investors will be provided with complete information about their returns and risks in a transparent manner, enabling them to make informed decisions. Pension accounts will also be portable, meaning you can easily transfer your account to any pension fund manager. Most importantly, whenever you withdraw your funds, at least 40% of the total amount will be required to be invested in an annuity. This will provide you with a fixed monthly or annual income after retirement.