Summary of this article
PFRDA considers proposals to increase the lump-sum withdrawal limit in NPS to 80 per cent.
Early exit may be allowed after a 15-year vesting period.
1 per cent exposure to gold and silver may be allowed in NPS for diversification.
The National Pension System (NPS) is set for substantial reforms aimed at increasing flexibility and expanding investment options, according to the Pension Fund Regulatory and Development Authority (PFRDA), S. Ramann, chairperson, PFRDA, said this at the ICC Conclave on NPS held in Mumbai on November 27, 2025. He highlighted several subscriber-centric measures that are under consideration, such as easing withdrawal conditions and increasing the percentage of the corpus permitted for withdrawal, among others.
The key proposals include permitting an early exit from the system, specifically after a 15-year vesting period. Besides, PFRDA is also contemplating the removal of the current lock-in requirement. Perhaps the most impactful proposal involves increasing the withdrawal limits, which are likely to be increased from the current 60 per cent to 80 per cent of the corpus.
In addition to enhancing flexibility regarding withdrawals, the reforms aim to broaden diversification opportunities within the NPS framework. A proposal was mentioned to allow investors to gain exposure to gold and silver. This new option would allow investment in precious metals up to a limit of 1 per cent within NPS portfolios. The idea is to enhance diversification opportunities.
Last month, PFRDA launched the Multiple Schemes Framework (MSF) with the same objective of offering subscribers more diversification. Under MSF, a subscriber can invest in schemes with 100 per cent equity exposure. The vesting period is also 15 years, unlike the common schemes, which allow full withdrawal only after the subscriber turns 60 years old. However, MSF scheme is only for non-government subscribers.
Lately, PFRDA has been actively making changes in the NPS to make it more flexible, more personalised, and aligned with the global practices.
In a recent interview with Outlook Money, the chairperson indicated that NPS may bring out a succession planning product as well. These changes and the under-consideration proposals indicate PFRDA’s plan to evolve NPS to better meet the financial needs and goals of its subscribers with enhanced liquidity and opportunities for portfolio growth.
