By Ira Alok Puranik
Copyright indiatimes
Effective October 1, 2025, non-government NPS subscribers will be able to allocate up to 100% of their funds in equities within a single NPS scheme. Under the recently introduced MSF, or Multiple Scheme Framework (MSF) for Non-Government Sector Subscribers, NPS subscribers not employed with the government will be able to have multiple schemes under a single PRAN across various CRAs (recordkeeping agencies such as CAMS, Protean and KFintech). Previously, this was limited to one scheme per tier, per CRA. Income Tax GuideIncome Tax Slabs FY 2025-26Income Tax Calculator 2025New Income Tax Bill 2025“These accounts held by the Subscribers with more than one CRA can be accessed through the Account Aggregator System through PAN and the annual Statement delivered by the designated CRA”, highlights the circular. As the name suggests, MSF will have multiple variants targeting different segments of investors. “Each scheme may have at least two variants, one moderate and one high-risk, with equity allocation allowed up to one hundred per cent in the high-risk category. This framework has been developed under the enabling provisions of Section 20(2) of the PFRDA Act, 2013, which permits subscribers to access multiple schemes under the NPS”, the circular further adds. Under this framework, PFs or pension funds have also been permitted to design schemes tailored to specific subscriber personas, such as self-employed professionals, digital economy (platform-based) workers, or corporate employees, where employer co-contributions are facilitated. How will MSF work?A person at the beginning of their career may have a higher risk appetite, while as time and their age progress, the same comes down. Hence, the same person may need different kinds of tailored schemes at different stages of life. MSF will allow non-government NPS subscribers to balance conservative and aggressive strategies within the same PRAN (permanent retirement account number), to plan for different life stages with tailored schemes, and to access transparent and low-cost retirement savings products.Each scheme will have at least 2 variants, one with moderate risks and the other with high risks, which will have a 100% equity allocation option. “PFs may also, at their discretion, introduce low-risk variants”, says the circular.Says SEBI RIA Abhishek Kumar, founder of Sahaj Money, “This framework would allow a pension fund manager to manufacture multiple customised schemes with equity exposure up to 100%, thus removing the previous 75% cap. This is a significant change from the current system, where subscribers could only choose one scheme that too with a set asset allocation.”Also, each scheme shall be benchmarked against the relevant market indices (e.g., equity indices, bond indices, or composite benchmarks) to ensure transparent performance disclosure.This framework, effective October 1, will be available to all new and existing NPS subscribers through both a Tier I account, which is retirement-focused and a Tier-2 account, which is voluntary. However, with a tier-1 account, a vesting period is compulsory. With tier-2 accounts, this vesting period is optional. As per the circular, a minimum vesting period of 15 years is compulsory for switching investment from one scheme under MSF to another scheme under MSF. What this means is that in case the subscriber is not satisfied with their current scheme’s performance under MSF and wishes to switch, they can do so as well. However, this switch can only be made to a common scheme (old schemes of PFs), and not to any other scheme under MSF if they have not completed the vesting period of 15 years. However, once they complete their 15-year vesting period, they can freely move across various schemes without any restriction. “The Subscribers who invest in schemes of PFs can move their funds across the schemes under Section 20(2) upon completion of the vesting period of 15 years or upon the time of normal exit as defined by the Exit Regulations of PFRDA”, the circular notes. For each scheme, the PF will publish a document titled NPS Scheme essentials, which will cover the following: Scheme nameObjectivesAsset allocationRisksVesting provisionsSwitchingExit optionsFee & charge structureBenchmarking framework Details of Fund ManagerWhat are the charges for subscribers under the Multiple-Scheme Framework?As for charges, the total annual charges are capped at 0.30% of the total AUM (assets under management). However, custodian charges, CRA charges, and NPS Trust charges, as prescribed by PFRDA, shall be over and above the mentioned chargesAlso, an additional incentive of 0.10% will be allowed to those PFs who manage to enrol more than 80% of new NPS subscribers to a scheme. “This incentive is available for three years from the launch of a scheme or until it reaches fifty lakh subscribers, whichever is earlier”, says the circular.“These benefits would come with higher costs as annual charges would go up from the current 0.03% to 0.09% range to up to 0.3% of assets under management (AUM). This reform could provide the incentive to private sector employees to subscribe to NPS, which currently accounts for only one-fifth of total assets despite strong growth”, adds Kumar.What if a scheme winds up?In case a scheme is winding up or closing down, non-government NPS subscribers will have the choice to migrate to any common scheme or a scheme as defined by Section 20(2) of the PFRDA Act.In case the subscriber fails to notify their choice, they will automatically be migrated to a Tier 1 auto choice LC 50 scheme, which is managed by the same pension fund. This scheme, also known as a moderate Life Cycle Fund, has a cap of 50% of the total assets for equity investment. The exposure in Equity Investments starts with 50% till 35 years of age and gradually reduces as per the age of the subscriber.
