PFRDA Clears Bank-Led Pension Funds, Revises IMF
ECONOMY & POLICY

PFRDA Clears Bank-Led Pension Funds, Revises IMF

The Pension Fund Regulatory and Development Authority (PFRDA) board has approved, in principle, a framework that will allow Scheduled Commercial Banks (SCBs) to independently set up pension funds to manage the National Pension System (NPS). The move is aimed at strengthening India’s pension ecosystem by enhancing competition and safeguarding subscriber interests.

The proposed framework seeks to remove regulatory constraints that have so far limited bank participation in pension fund sponsorship. It introduces clearly defined eligibility criteria based on net worth, market capitalisation and prudential soundness, aligned with Reserve Bank of India norms. This is intended to ensure that only well-capitalised and systemically robust banks are permitted to sponsor pension funds. Detailed eligibility norms will be notified separately and will apply to both new and existing pension funds.

PFRDA has also appointed three new trustees to the Board of NPS Trust following a formal selection process. The newly appointed trustees are Dinesh Kumar Khara, former Chairman of State Bank of India; Swati Anil Kulkarni, former Executive Vice President at UTI AMC; and Dr Arvind Gupta, Co-Founder and Head of the Digital India Foundation and a member of the National Venture Capital Investment Committee under the SIDBI-managed Fund of Funds Scheme. Dinesh Kumar Khara has additionally been designated as Chairperson of the NPS Trust Board.

To align the pension framework with evolving market realities, public aspirations and international benchmarks, and to expand coverage across corporate, retail and gig-economy segments, PFRDA has revised the Investment Management Fee (IMF) structure for pension funds. The revised slab-based IMF will come into effect from 1 April 2026 and is designed to further safeguard subscriber interests.

Under the new structure, differentiated IMF rates will apply to government and non-government sector subscribers, including schemes under the Multiple Scheme Framework, with MSF corpus counted separately. The IMF for government sector employees under the composite scheme, or those opting for Auto Choice and Active Choice G 100, remains unchanged.

For non-government sector subscribers, the IMF will be linked to assets under management. Pension funds managing assets of up to Rs 250 billion will be allowed to charge an IMF of 0.12 per cent. For assets above Rs 250 billion and up to Rs 500 billion, the IMF will be 0.08 per cent. Funds with assets above Rs 500 billion and up to Rs 1.5 trillion will be subject to an IMF of 0.06 per cent, while those managing assets above Rs 1.5 trillion will be capped at an IMF of 0.04 per cent.

The Annual Regulatory Fee of 0.015 per cent payable by pension funds to PFRDA will remain unchanged. Of this, 0.0025 per cent of assets under management will continue to be passed on to the Association of NPS Intermediaries to support coordinated awareness, outreach and financial literacy initiatives under PFRDA’s overall guidance.

With increasing formalisation across India’s financial and pension sectors, PFRDA said these reforms are expected to help subscribers and stakeholders access a more competitive, well-governed and resilient NPS ecosystem, leading to improved long-term retirement outcomes and stronger old-age income security.

The Pension Fund Regulatory and Development Authority (PFRDA) board has approved, in principle, a framework that will allow Scheduled Commercial Banks (SCBs) to independently set up pension funds to manage the National Pension System (NPS). The move is aimed at strengthening India’s pension ecosystem by enhancing competition and safeguarding subscriber interests. The proposed framework seeks to remove regulatory constraints that have so far limited bank participation in pension fund sponsorship. It introduces clearly defined eligibility criteria based on net worth, market capitalisation and prudential soundness, aligned with Reserve Bank of India norms. This is intended to ensure that only well-capitalised and systemically robust banks are permitted to sponsor pension funds. Detailed eligibility norms will be notified separately and will apply to both new and existing pension funds. PFRDA has also appointed three new trustees to the Board of NPS Trust following a formal selection process. The newly appointed trustees are Dinesh Kumar Khara, former Chairman of State Bank of India; Swati Anil Kulkarni, former Executive Vice President at UTI AMC; and Dr Arvind Gupta, Co-Founder and Head of the Digital India Foundation and a member of the National Venture Capital Investment Committee under the SIDBI-managed Fund of Funds Scheme. Dinesh Kumar Khara has additionally been designated as Chairperson of the NPS Trust Board. To align the pension framework with evolving market realities, public aspirations and international benchmarks, and to expand coverage across corporate, retail and gig-economy segments, PFRDA has revised the Investment Management Fee (IMF) structure for pension funds. The revised slab-based IMF will come into effect from 1 April 2026 and is designed to further safeguard subscriber interests. Under the new structure, differentiated IMF rates will apply to government and non-government sector subscribers, including schemes under the Multiple Scheme Framework, with MSF corpus counted separately. The IMF for government sector employees under the composite scheme, or those opting for Auto Choice and Active Choice G 100, remains unchanged. For non-government sector subscribers, the IMF will be linked to assets under management. Pension funds managing assets of up to Rs 250 billion will be allowed to charge an IMF of 0.12 per cent. For assets above Rs 250 billion and up to Rs 500 billion, the IMF will be 0.08 per cent. Funds with assets above Rs 500 billion and up to Rs 1.5 trillion will be subject to an IMF of 0.06 per cent, while those managing assets above Rs 1.5 trillion will be capped at an IMF of 0.04 per cent. The Annual Regulatory Fee of 0.015 per cent payable by pension funds to PFRDA will remain unchanged. Of this, 0.0025 per cent of assets under management will continue to be passed on to the Association of NPS Intermediaries to support coordinated awareness, outreach and financial literacy initiatives under PFRDA’s overall guidance. With increasing formalisation across India’s financial and pension sectors, PFRDA said these reforms are expected to help subscribers and stakeholders access a more competitive, well-governed and resilient NPS ecosystem, leading to improved long-term retirement outcomes and stronger old-age income security.

Related Stories

Gold Stories

Next Story
Resources

Schindler named among Forbes’ World’s Best Employers 2026

Schindler has been named among Forbes’ World’s Best Employers 2026, a global ranking recognising companies for their workplace environments.Compiled by Forbes in partnership with Statista, the ranking is based on independent employee feedback, including whether employees would recommend their organisation to friends and family.The company said the recognition reflected its focus on creating a workplace where employees can develop their expertise and build careers. ..

Next Story
Infrastructure Urban

India needs an export-execution mindset: Vishesh Jain

Interview with Vishesh Jain, Founder & CEO, EximpleWhat gaps in India’s global trade ecosystem led you to build Eximple, and what problem did you see businesses struggling with most?Eximple came out of a problem that all three founders had seen from different choke points in the trade ecosystem. India has millions of MSMEs and manufacturers, and many of them can make products that are genuinely competitive on quality. Yet only a small fraction is able to build meaningful international businesses. In our experience, the gap is usually not manufacturing capability; it is the ability to exe..

Next Story
Building Material

Nuvoco reports 13.5% revenue growth in Q2 FY27

Nuvoco Vistas Corp. Ltd. reported consolidated revenue of Rs 27.9 billion for Q2 FY27, up 13.5% year on year. Cement sales volume rose 9% to 4.7 million tonnes (MMT), while EBITDA increased 11% to Rs 4.11 billion.The company said it began its cement operations in 2014 with a 2.3 MMT per annum (MMTPA) operation at Nimbol. It now aims to reach 35 MMTPA of cement capacity by FY28, nearly 15 times its initial capacity. Its portfolio spans cement, ready-mix concrete and modern building materials.On sustainability and cost efficiency, Nuvoco partnered with CleanMax for a 46.4 MW wind-solar hybrid re..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

SPECIAL OFFER
QR Code