India’s National Pension System introduces a flexible Multiple Scheme Framework, empowering investors with more control, choice, and equity exposure.
Major Overhaul in NPS from October 1, 2025
The National Pension System (NPS) is set for a transformational change. From October 1, 2025, non-government sector subscribers will be allowed to allocate up to 100% of their contributions to equity in a single scheme — a significant shift from previous limits.
- This move brings NPS closer to global pension systems in terms of customization and investment flexibility.
- It caters especially to self-employed professionals, gig economy workers, and other non-government sector participants.
Multiple Scheme Framework (MSF): What It Means
The Multiple Scheme Framework (MSF) is the backbone of this reform. It enables investors to hold multiple schemes within one PRAN (Permanent Retirement Account Number) using their PAN as the unique identifier across CRAs.
- Earlier, subscribers were limited to one scheme per tier and one CRA.
- Now, multiple schemes across CAMS, KFintech, and Protean are available under one account.
Key Advantages:
- Greater investment diversification.
- Ability to align with changing life stages and financial goals.
- Enhanced customization and risk-based choices.
100% Equity Allocation: High Risk, High Reward
Under MSF, each scheme will offer at least two variants:
- Moderate-risk option with balanced exposure.
- High-risk option allowing up to 100% equity investment.
This gives investors the freedom to choose based on their risk appetite, especially appealing to younger professionals looking to grow wealth aggressively in early career stages.
Tailored Schemes for Different Investor Types
Pension Funds (PFs) can now design schemes targeting specific profiles:
- Self-employed individuals
- Digital economy and freelance workers
- Corporate employees with employer contributions
These customized plans allow more relevant asset allocations and scheme design based on lifestyle and profession.
Rules for Tier-1 and Tier-2 Accounts
The new MSF rules will apply to both new and existing Tier-1 and Tier-2 account holders.
- Tier-1 Account: Primarily for retirement with mandatory vesting.
- Tier-2 Account: Voluntary, with an optional vesting period.
Switching Rules: Flexibility with Conditions
Subscribers can switch between schemes, but with constraints:
- Switching is allowed within common (old) schemes before a 15-year vesting period.
- After 15 years, free movement between MSF schemes becomes available.
Important Note:
- A minimum 15-year vesting period is required to switch between different MSF schemes.
- Pension Funds may also introduce low-risk variants to suit highly risk-averse investors.
Benchmarking for Transparency
Each scheme will be benchmarked to a relevant market index — such as equity, bond, or composite indices — for:
- Performance transparency
- Accountability
- Better decision-making for investors
From October 2025, the NPS will offer more freedom, personalization, and growth potential than ever before. The introduction of 100% equity investment, multiple scheme options, and flexibility to switch is a significant leap toward making retirement planning more dynamic, transparent, and investor-friendly.
