PFRDA notifies rules to protect NPS subscribers from lapses by entities engaged by pension funds

In case of any specific purpose scheme, the new rule notified on July 13, 2026 allows pension funds to engage an external entity capable of operationalising such schemes. However, the pension fund will be responsible to the subscriber for any lapses in such schemes.

"For any specific purpose scheme to be provided by the Pension Fund, it may engage any other entity capable of performing such functions to operationalize such scheme, in accordance with the guidelines issued by the Authority. However, the Pension Fund shall be responsible to the subscriber, who has availed any service under such scheme and be liable for any act of omission or commission of any entity engaged by it, as specified above," the notification said.

The entity to be engaged for any specific purpose scheme must have the technological capacity to integrate with Pension Fund or any other intermediary, registered with the Authority. Further, they will be supervised per PFRDA guidelines.

"Such other entity shall have the technological capacity to integrate with Pension Fund or any other intermediary, registered with the Authority, including the Central Recordkeeping Agency, for the purpose of collection of information or facilitation of payment of benefits or any other services, to or on behalf of the subscriber," the notification said.

"The Pension Fund and the entity engaged by it for the purpose of provision of services envisaged under this provision shall be supervised under the guidelines and instructions issued by the Authority besides compliance with all other laws as are applicable," it added.

The above rules have been notified as Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) (Amendment) Regulations, 2026. These rules came into effect from July 13, 2026.

The new rules have been inserted in Regulation 4A of the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) Regulations, 2015.

Sandbox regulations notified

Meanwhile, the pension regulator has also notified the Pension Fund Regulatory and Development Authority (Regulatory Sandbox) Regulations, 2026.

These regulations are expected to facilitate "responsible innovation in the pension sector while ensuring the protection of subscribers’ interest and the orderly development of pension schemes regulated by the Authority".

They are also expected to facilitate "the establishment of a Regulatory Sandbox for testing innovative solutions and, where necessary, granting limited and time-bound regulatory relaxations for such testing."