NPS gets a makeover: 5 new equity categories, Rs 200 onboarding charge from October 1

The aim of the new framework is to make NPS schemes easier to understand and compare, giving subscribers clearer information before they make investment decisions.

In Short

• PFRDA introduces new NPS scheme classification by equity allocation
• Five equity categories from aggressive to debt-oriented defined
• Rs 200 onboarding charge from October 1, 2026, via quarterly deductions

Choosing an NPS scheme may soon become less confusing for investors. The pension regulator has changed the way NPS schemes will be classified and presented, giving subscribers a clearer picture of how much equity a scheme can hold, the risk involved and how it has performed.

The Pension Fund Regulatory and Development Authority (PFRDA), in a circular dated August 28, 2026, has introduced a standard framework for the classification and presentation of NPS schemes. It has also removed the earlier distinction between common schemes and those launched under the Multiple Scheme Framework (MSF).

FIVE NEW EQUITY-BASED CATEGORIES

Under the new framework, MSF schemes will be classified according to their equity allocation. The aim is to help subscribers understand the level of equity exposure before choosing a scheme.

Category A will have 80-100 per cent equity allocation and will be classified as aggressive growth with very high risk. Category B will have 60-80 per cent equity and will be classified as high growth with high risk.

Category C will have 35-60 per cent equity and will be considered balanced growth with medium risk. Category D will have 10-35 per cent equity and will be classified as conservative. Category E will have 0-10 per cent equity and will be debt-oriented.

A scheme cannot have an equity mandate that falls across two categories. For example, a scheme cannot have an equity range covering both Category B and Category C. It must fit into one prescribed category.

For NPS subscribers, this should make it easier to compare schemes from different pension funds and choose one based on their risk appetite.

RS 200 ONBOARDING CHARGE FROM OCTOBER 1

There is also a new charge for subscribers who register for NPS through a Point of Presence (PoP).

From October 1, 2026, a one-time onboarding charge of Rs 200 will apply for each Permanent Retirement Account Number (PRAN).

The entire amount will not be deducted at one go. Instead, Rs 50 per quarter will be recovered through cancellation of units by Central Recordkeeping Agencies (CRAs). The amount will then be paid to the PoP in the month following the quarter in which the onboarding is completed.

MORE INFORMATION BEFORE CHOOSING AN NPS SCHEME

PFRDA has also changed the way scheme information should be displayed to subscribers. NPS platforms will have to show schemes in a standard sequence, allowing investors to first identify the type and category of a scheme and then select a pension fund.

Investors should be able to compare the scheme name and pension fund, launch date, historical returns, benchmark and benchmark returns, charges, riskometer and assets under management.

This is important because looking only at returns may not give investors the full picture. A scheme may deliver higher returns while also taking higher risks. Comparing its performance with the benchmark and checking the risk level can help subscribers make a more informed choice.

WHAT EXISTING NPS INVESTORS NEED TO KNOW

The new rules are mainly aimed at standardising the way NPS schemes are classified, named and presented. PFRDA has removed the distinction between common schemes and MSF schemes, with all NPS schemes now coming under the new framework.

However, the new classification rules do not apply to accounts tagged to the Government sector.

For other existing NPS subscribers, a change in the scheme name or classification does not automatically mean they need to make a fresh investment decision. However, they should check the new scheme name, equity category, riskometer, charges and benchmark when their pension fund updates its offering.

If a scheme is restructured or merged, subscribers may need to look more closely at what has changed.

The overall aim of the new framework is to make NPS schemes easier to understand and compare, giving subscribers clearer information before they make investment decisions.

- Ends