New Delhi. With the beginning of the new year, important reforms have been announced by the government and the regulator regarding the National Pension System (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) has made policy changes aimed at making NPS more competitive, transparent and trustworthy. These changes are especially expected to directly benefit retail investors and people dependent on future pension.
Banks got bigger rights
Under the new rules, Scheduled Commercial Banks (SCBs) will now be able to independently set up pension funds and manage pension assets themselves. Earlier only limited institutions were active in this sector, but now competition will increase with the entry of banks. The Finance Ministry believes that this will bring new thinking to the pension sector and customers will get better services and potentially better returns. However, not every bank will get this permission. For this, strict eligibility conditions have been set based on net worth, market capitalization and prudential standards of RBI. This will ensure that only financially strong banks can become pension fund sponsors.
New appointments in NPS Trust Board
Changes have also been made in the Trust Board to strengthen the governance of NPS. Former SBI Chairman Dinesh Kumar Khara has been appointed Chairperson of NPS Trust. Apart from this, Swati Anil Kulkarni and Dr. Arvind Gupta have been made general trustees. These appointments are being considered an important step towards transparency and better monitoring in the pension system.
Relief in investment management fees
Taking another major decision, PFRDA has announced to implement the new slab-based system of Investment Management Fee (IMF) from April 1, 2026. Tariffs for some government sector schemes will remain the same, but there will be a significant reduction in charges for non-government sector (NGS) subscribers. This will help make NPS more popular among the corporate sector, retail investors and those working in the gig economy.
Understanding investment options and risk is important
It is important to understand that there is no guaranteed return in NPS. The returns entirely depend on the investment option that the customer chooses. Investing in equity has the potential for higher returns, but the risk is also higher. Now PFRDA has allowed funds to invest up to 100% in equities, providing more flexibility to investors with risk appetite.
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