From 1 October 2025, the Pension Fund Regulatory and Development Authority (PFRDA) introduced major reforms for non-government National Pension System (NPS) subscribers. These changes provide greater flexibility, higher equity exposure, and easier withdrawal options to make retirement planning more dynamic and investor-friendly.
Key Highlights
- 100% Equity Option: Non-government subscribers can now allocate up to 100% of their contributions in equities under a new high-risk scheme option.
- Multiple Scheme Framework (MSF): Subscribers are allowed to maintain multiple NPS schemes under a single account (PAN/PRAN) across different pension fund managers.
- Higher Lump-Sum Withdrawal Limit: The 60% lump-sum and 40% annuity rule at age 60 remains unchanged. The proposed increase (e.g., to 80%) was only part of the September 2025 PFRDA draft and hasn’t been approved or implemented yet.
- Flexible Exit Rules: Minimum vesting period reduced to 15 years, providing greater liquidity and early-exit flexibility.
Conclusion
The October 2025 NPS reforms mark a turning point for private-sector and self-employed investors, giving them control over portfolio risk and exit options. The 100% equity allocation opens a path for higher long-term returns, though with increased risk — making it suitable primarily for younger, risk-tolerant investors.
FAQs
1. Who benefits from these rule changes?
Ans: All non-government subscribers — including corporate employees, professionals, and self-employed individuals.
2. Can I now invest entirely in equities?
Ans: Yes, you can opt for up to 100% equity exposure under the new high-risk category.
3. What is the benefit of the Multiple Scheme Framework?
Ans: It allows you to diversify investments across multiple schemes and pension fund managers under one account.
4. What changed in withdrawal rules?
Ans: The minimum vesting period for new schemes has been reduced to 15 years, providing early-exit flexibility.
Note: Changes to the lump-sum withdrawal limit (currently 60% at age 60) are currently under review by PFRDA.
5. Is 100% equity investment advisable for everyone?
Ans: No. It is ideal for investors with a long-term horizon and high risk appetite; others should retain a balanced allocation.
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