National Pension System: Selecting a scheme under the National Pension System (NPS) will become much easier than before. The Pension Fund Regulatory and Development Authority (PFRDA) has implemented a new structure to categorise NPS schemes and display all relevant information. Under this framework, investors will see standardised information on equity exposure, risk, returns, fees, and benchmarks for each scheme.
Additionally, starting October 1, 2026, a one-time registration fee of ₹200 per Permanent Retirement Account Number (PRAN) will be charged for NPS accounts opened through Points of Presence (PoPs). According to reports, this amount will not be deducted from the account in a lump sum; instead, Central Recordkeeping Agencies (CRAs) will collect the fee in quarterly instalments of ₹50. This amount will be remitted to the PoP in the month following the quarter in which the account opening process was completed.
Schemes to be Divided into 5 Categories
The PFRDA defined these new NPS scheme categories in a circular issued on August 28, 2026. Under the new system, schemes will primarily be classified into five categories based on their equity exposure: Category A, Category B, Category C, Category D, and Category E. This classification will make it much easier for investors to understand the extent of equity market exposure and the associated risk levels before selecting a scheme.
A Scheme Can Belong to Only One Category
Under the new system, a single scheme cannot be placed in two categories simultaneously; for instance, a scheme cannot be part of both Category B and Category C at the same time. It must be assigned to one specific category. This structure will also make it easier to compare different NPS schemes. Investors will be able to compare schemes based on parameters such as scheme name, pension fund, launch date, historical returns, benchmarks, charges, riskometer, and Assets Under Management (AUM). Don’t base investment decisions solely on returns
The primary objective of the new rule is to provide investors with a comprehensive view of the scheme. Schemes offering higher returns may also carry higher risks. Therefore, instead of focusing only on past returns, investors should consider factors such as equity exposure, benchmarks, and risk-adjusted performance.
How will this affect NPS account holders?
The main aim of the NPS system overhaul is to standardise scheme names, classifications, and the way information is presented. These new classification rules will not apply to government-sector accounts. For other existing NPS account holders, a change in a scheme’s name or category does not mean they need to make a new investment decision. However, if a scheme undergoes changes, restructuring, or a merger, they should carefully review the details provided.