NPS changes 2025: What’s new for National Pension System subscribers? Top 10 points

In 2025, the National Pension System (NPS) went through major changes as PFRDA and the Government of India introduced reforms to make it more flexible, more inclusive, and more secure for retirees.

Key changes and initiatives

1. Multiple Scheme Framework (MSF)

Subscribers can now hold and manage multiple schemes under a single PRAN, tailored to different risk profiles and retirement goals.

"The introduction of MSF envisages a pension system offering multiple choices, transparency, and efficiency. By bringing this framework into operation, the Authority is ensuring that innovation in pension design is balanced by strong safeguards for subscribers," PFRDA had said while announcing MSF under NPS.

2. Expanded equity allocation

This offers the potential for higher long-term returns for risk-tolerant investors.

However, 100% equity allocation under MSF is allowed only for new contributions. You cannot move your existing NPS contribution to MSF. But you can move back to regular schemes if you later don't like the MSF.

Further, there is a lock-in of 15 years or 60 years of age, whichever is earlier.

3. Unified Pension Scheme (UPS) for Government employees

Launched 1 April 2025, UPS provides a fully funded, contributory system with:

• Defined benefits

• Inflation protection

• Fiscal sustainability

Government employees under NPS had the option to migrate to UPS; the deadline was November 30.

4. Flexible exit, withdrawal, and annuity rules (Proposed)

This increases flexibility in retirement income management.

5. Expanded investment options for Central Government Employees

Government employees now have access to LC75 and Balanced Life Cycle (BLC) funds, alongside existing options (Scheme G, LC25, LC50).

Equity exposure can now be tapered with age, enabling more risk-aligned retirement planning.

6. Income tax benefits and incentives

Tax benefits extended to UPS subscribers, with provisions for retirement benefit accounts allowing certain withdrawals to be tax-exempt if conditions are met.

7. “Retirement Benefit Accounts” in new Income Tax Act 2025

Certain NPS-linked withdrawals from these accounts become tax-exempt if conditions are met.

8. Subscriber growth and Assets Under Management (AUM)

NPS and APY crossed ₹16 lakh crore in AUM with over 9 crore subscribers in 2025. Private-sector additions exceeded 12 lakh subscribers in FY 2025, reflecting increasing adoption.

9. Outreach to gig, platform, rural, and informal workers

• Pilot programs launched with Zomato and GoaMiles to enroll gig and platform workers.

• Collaboration with NABARD to extend pension awareness and coverage to 10 crore farmers via 45,000 FPOs.

These initiatives bring NPS closer to achieving universal pension coverage.

10. PFRDA unveils proposals for more flexible and assured NPS pensions

Scheme 1: Flexible, non-assured model using a step-up SWP and annuity.

Scheme 2: Assured pension with CPI-linked adjustments.

Scheme 3: Pension Credits ensuring fixed monthly payouts.

Public feedback invited on all proposals to ensure transparent, evidence-based reforms.

The 2025 reforms have made NPS more flexible, inclusive, and investor-friendly.