PFRDA Issues Standardised Classification Framework For NPS Schemes To Help Subscribers Make Informed Choices

National Pension System (NPS) subscribers will now be able to compare different schemes under the NPS framework easily and make informed decisions. The Pension Fund Regulatory and Development Authority (PFRDA) said in a circular dated August 28, 2026, that it has established a standardisation framework for NPS schemes regarding their classification, presentation, operation, and disclosure of investment. This has been done to allow subscribers better understand and compare the schemes in order to make an informed investment decision.

The new guidelines mandate a uniform classification of all NPS schemes across subscriber-facing platforms. 

Going forward, these schemes will be structured into five types:

1. Lifecycle-based Schemes – Auto Choice (Life Cycle Aggressive, Life Cycle 75 - High, Life Cycle 50 – Moderate and Life Cycle 25 – Low)

2. Active Choice – subscribers decide allocation across asset classes: Equity (E), Corporate debt (C), and Government bonds (G)

3. NPS Sanchay – scheme for the informal sector with a pre-defined investment pattern

4. Multiple Scheme Framework (MSF) – investment schemes launched by Pension Funds with the approval of the Authority

5. Regulation 4A Curated/Thematic Schemes – Schemes under Regulation 4A of the Exit Regulations, like NPS Vatsalya, NPS Swasthya, and NPS MSME

The life cycle funds will continue to offer age-based automatic asset allocation across three asset categories: equity (E), corporate debt (C), and Government securities (G), and reduce equity exposure based on age. It will have four variants: Aggressive, LC 75 (High), LC 50 (Moderate), and LC 25 (Low). 

Under the Active Choice investment, subscribers will have direct control over asset allocation. They can decide their contribution across the E, C, and G asset classes, with a 75 per cent limit of equity exposure under the NPS Tier I account. NPS Sanchay remains a scheme for the informal sector workers with an asset pattern similar to what applies to the Government sector schemes, where maximum equity exposure could be 25 per cent and the exposure to corporate debt around 45 per cent.  

For MSF schemes offered by pension funds, the schemes have now been classified into five standardised risk categories based on equity exposure. These are:  

• Category A (Aggressive Growth, 80-100 per cent equity)

• Category B (High Growth, 60-80 per cent)

• Category C (Balanced Growth, 35-60 per cent)

• Category D (Conservative, 10-35 per cent)

• Category E (Debt, 0-10 per cent)

MSF Schemes’ Naming Convention

To improve transparency, the PFRDA has mandated a naming format or “naming convention” for MSF schemes. The MSF schemes’ names will now be given in the following format:

Abbreviation of Pension Fund Name + “NPS” + MSF Category Code + Scheme Name. For instance, a scheme might be named as ‘ABC NPS A Retirement Scheme’.

A pension fund can offer up to two schemes under each category under each Tier. So for Tier II, the name of the same scheme might be ‘ABC NPS A Retirement Scheme Tier II’.

Display Of Schemes’ Information

To enable subscribers to make informed decisions, PFRDA mandates the digital interfaces and Central Recordkeeping Agency (CRA) platforms to uniformly display information in a sequence, starting with the scheme type (Lifecycle based/ Active choice/ NPS Sanchay/ MSF/ 4A), followed by the category under these schemes, and finally the Pension Fund selection.  

To facilitate comparison of the different schemes, subscribers will be presented with the general information, such as scheme name, pension fund name, date of launch, and critical comparative data, including historical returns, applicable charges, comparative benchmark returns, assets under management (AUM), and a "Riskometer".

The circular also outlines the transaction rules. Subscribers can hold only one Lifecycle or Active Choice scheme at a time, but they can hold multiple MSF schemes at the same time under a single PRAN.

Subscribers can change their investment scheme or the pension fund every year, but portability is restricted to two requests per financial year. They also have the option to merge multiple schemes into one ‘Target Scheme’. On the merged investment, the rules of the target scheme, including vesting period, withdrawal limits, charges, etc., will apply.

However, these standardisation guidelines do not apply to the government sector accounts.

Operationalisation Of Naming Conventions Within 30 Days

To implement these changes, the PFRDA has issued a separate operationalisation circular on the same date (August 28, 2026). The directive orders pension funds to reclassify multi-category equity schemes and implement the standardised naming conventions within 30 days. As Pension Funds can offer up to two schemes per category per tier, they are required to consolidate any additional schemes within 45 days. Also, every scheme must display risk-o-meters as per the PFRDA-specified format.

The circular abolishes the difference between MSF schemes and the common schemes. It reads, “With effect from the date of this circular, the distinction between common schemes and Multiple Scheme Framework (MSF) Schemes shall stand discontinued.”

However, PFRDA has given Pension Funds freedom to offer value-added services, such as income pay-out solutions, annuity-related services, succession planning and other retirement planning solutions, in accordance with the guidelines. They can do that directly or in partnership with other service providers.

The standardisation measures are expected to make the expanding pool of schemes under the NPS framework for subscribers easy to compare and select the suitable one for them.