Summary of this article
· PFRDA plans to introduce succession planning within NPS
· Chairperson S. Ramann highlights benefits of new annuity/pension products
· Focus is on broadening pension coverage in informal sector
The Pension Fund Regulatory and Development Authority (PFRDA) has something new up its sleeve. It is now contemplating “bringing in the concept of succession planning” within the National Pension System (NPS), said PFRDA chairperson S. Ramann, in an exclusive interview with Outlook Money editor Nidhi Sinha. He also talked about the new annuity/pension products under NPS and said the returns from these will be higher than insurance annuities owing to the low cost of the product.
There has been a flurry of announcements after the new chairperson took over in June, including the introduction of the Multiple Scheme Framework (MSF), which came into effect from October 1, 2025, and has made multiple changes in the existing schemes of NPS.
NPS Succession Planning Product
When asked if there were more changes on the anvil, Ramann said, “We still have one more thought where we are saying how do we make the transition from NPS from me to my kith and kin as a succession plan. We are talking to some of the people who have experience in these products.”
Elaborating on the idea of linking succession planning with NPS, Ramann said, “We should bring in the concept of succession plan happening through the NPS system. The CRAs, which are holding the information, are the ideal vehicle for making sure that all succession plans are also back-ended on to NPS.”
MSF Meant For Non-Government Employees
Among other changes, MSF has been the most significant one. The chairman emphasised during the interview that MSFs are primarily meant for non-government employees. Calling it a bold reform, he said, “National Pension System is not for only government (employees). That was probably the thinking earlier. (But now we are) moving from government to non-government and addressing the needs of a very large working population—approximately 50 to 60 crore people. That is really what is this bold reform about.”
NPS Annuity/Pension Products To Give Higher Returns
Further, there’s a consultation paper, which talks about launching three annuity/pension schemes from the NPS umbrella. This paper, too, is open for comments from stakeholders and members of the public until October 31, 2025.
Regarding the annuity products, Ramann said he believed in giving people choice. Plus, considering that inflation eats into returns, an annuity product must have an inflation shield. “Annuities are there, there are even tenor based annuities, but can we look at other products which can bring in the inflation shield,” he said.
He also claimed that the NPS annuities will likely have a higher return than insurance annuities because of the low cost of the product. He explained: “Our own understanding is that certainly the returns will be higher because the costs are much lower. You have to look at the manufacturing cost of that financial product. The moment you move away from certain bindings, so keep life out of it, that uncertainty goes, costs come down.”
While the Unified Pension System (UPS) offers a predictable pension, its adoption has been low for different reasons. Although the scheme is only for central government employees with a one-time option to switch back to the NPS towards the end of the service, the low adoption is a little unexpected. This would mean they would remain with the NPS.
PFRDA Chairperson Votes For UPS Over NPS For Government Employees
When asked about his preferred pension option, Ramann clarified that he is covered under the OPS; however, had he not been, he would have opted for the UPS.
For new investors who may not be able to think about retirement in advance, he suggests that instead of spending money on aerated beverages or something, put that money in NPS. With the digital economy, it is easier for people to save. He says that whenever one gets a thought of saving money, save in NPS, from which you cannot withdraw anytime. It will offer the power of compounding and a good amount of retirement corpus.
So, invest and don’t withdraw, and you will be able to save for retirement.
Of late, the government’s focus has been on broadening pension coverage among informal and self-employed people. It can be understood with the Union Finance Minister Nirmala Sitharaman’s recent statement, “The National Pension System (NPS) should turn into a true ‘Jan Andolan'.”
Whether it is the introduction of the MSF in the NPS or the proposed changes in the NPS schemes, efforts are being made to make NPS more flexible and suitable for both the formal and informal sectors.
Read the full interview in the upcoming November issue of Outlook Money and watch the full video later in October.
