New Delhi: The Pension Fund Regulatory and Development Authority (PFRDA) has unveiled a series of policy reforms aimed at strengthening and expanding the National Pension System (NPS), including a new framework that will allow Scheduled Commercial Banks (SCBs) to independently set up pension funds.

The decision, approved by the PFRDA Board, is intended to deepen the pension ecosystem by boosting competition, improving governance standards and safeguarding subscriber interests, the Ministry of Finance said on Thursday.

Under the proposed framework, regulatory barriers that had previously restricted bank participation in pension fund management will be eased. Banks will be permitted to sponsor pension funds based on clearly defined eligibility criteria, including net worth, market capitalisation and prudential soundness, aligned with Reserve Bank of India (RBI) norms. This, the ministry said, will ensure that only well-capitalised and systemically strong banks are allowed to enter the NPS pension fund space.

The detailed eligibility criteria will be notified separately and will apply to both existing and new pension funds.

New trustees appointed to NPS Trust

In a parallel move, PFRDA has appointed three new trustees to the Board of the NPS Trust, following a formal selection process. The new trustees are Dinesh Kumar Khara, former Chairman of the State Bank of India; Swati Anil Kulkarni, former Executive Vice-President of UTI AMC–Trustee; and Dr Arvind Gupta, Co-founder and Head of the Digital India Foundation and a member of the National Venture Capital Investment Committee under the SIDBI-managed Fund of Funds Scheme.

Khara has also been named Chairperson of the NPS Trust Board, strengthening leadership oversight at the apex level.

Revised investment fee structure from April 2026

To align the pension framework with evolving market realities, public expectations and international best practices, PFRDA has also revised the Investment Management Fee (IMF) structure for pension funds. The changes, effective April 1, 2026, are aimed at expanding NPS coverage across government, corporate, retail and gig-economy segments, while protecting subscriber returns.

The revised slab-based IMF introduces differentiated fee rates for government and non-government sector subscribers. The structure will also apply to schemes under the Multiple Scheme Framework (MSF), with MSF assets counted separately for fee calculations.

PFRDA said the reforms are expected to create a more competitive, transparent and resilient NPS ecosystem, enabling subscribers and stakeholders to benefit from stronger governance, improved fund performance and enhanced long-term retirement income security.

IANS