NPS MSF
In September 2025, India's pension regulator, the PFRDA, announced a Multiple Scheme Framework (MSF) for the National Pension System (NPS). This new framework applies to people in the private sector or selfâÂÂemployed.
From 1 October 2025, you can have more than one NPS scheme under one PRAN and choose a highâÂÂrisk scheme that invests up to 100% in equities. Previously, you could invest only up to 75% in shares.
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Point |
Explanation |
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Who can use it? |
People who are not government employees. Both new and existing NPS users in TierâÂÂ1 or TierâÂÂ2 accounts are included. |
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Scheme types |
Each pension fund scheme under the new framework will have variants based on risk profile, including a high-risk variant that allows up to 100% equity investment. |
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LockâÂÂin period |
A 15âÂÂyear vesting period is required before switching between MSF schemes. You can exit at age 60, at retirement or after 15 years (whichever is earlier), withdrawing up to 60 % of the corpus taxâÂÂfree. |
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Switching |
If you want to switch before 15 years, you can only move to the older common schemes. After 15 years, you can switch freely between the new schemes. |
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Fees |
Pension fund managers can charge a management fee of up to 0.30%, higher than before. This is still lower than typical mutual fund fees. |
Stocks, or equities, can grow faster than bonds or fixedâÂÂincome investments over a long period. As per the data from the NPS Trust, pension funds managed by HDFC, ICICI and UTI earned over 12% per year on average over 5 and 10 years. Bond funds returned around 7.5%-9% while government bond funds earned around 9%.
Putting all your NPS money in equity means you could benefit from these higher returns. For instance, investing â¹5,000 each month from age 25 to 60 at a 10% yearly return may grow to over â¹1.9 crore.
Shares don't always go up. They can rise quickly but can also drop sharply when markets fall. A 100 % equity plan means your pension savings will change with stock market movements. You need to be comfortable with this volatility and be ready to stay invested for many years. If you are nearing retirement, a mix of shares and bonds might suit you better because it reduces sudden losses.
The new highâÂÂrisk scheme locks your money in for 15 years. You can't switch out of it during this period unless you move back to the old common schemes. You may withdraw up to 60% of your money without tax only after age 60 or after 15 years. This means you should not rely on your NPS savings for emergencies.
When you finally exit the scheme, you must use 40% of your savings to buy an annuity (a pension plan). Under the MSF, you can leave after 15 years or at age 60 and still get 60% of your money taxâÂÂfree. That's more flexible than the old rule, where leaving early meant you had to annuitise 80% of your savings.
The PFRDA's new Multiple Scheme Framework ushers in greater flexibility for NPS subscribers. The ability to invest 100% in equity, along with tailored schemes and a reduced lockâÂÂin, makes NPS more attractive for growthâÂÂoriented investors.
However, full equity exposure carries a higher risk and a long vesting period. Evaluate your financial goals, risk appetite and liquidity needs carefully. A balanced strategy, such as combining the highâÂÂrisk scheme with moderate or lowâÂÂrisk assets, can help you maximise growth while safeguarding your retirement portfolio.
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