PFRDA standardises classification, presentation of NPS schemes; MSF funds to be grouped into five categories

The framework has been prescribed through Circular No. PFRDA/2026/47/REG-PF/10 dated August 28, 2026.

PFRDA said the circular seeks to “establish a standardised framework for classification and presentation of investment schemes, facilitate informed investment decisions by subscribers, promote comparability of schemes offered by different Pension Funds and prescribe uniform requirements relating to scheme naming, subscriber journeys, disclosures and implementation.”

New framework classifies NPS schemes into Lifecycle-based, Active Choice, NPS Sanchay, MSF and 4A categories

Under the framework, all schemes under NPS will be classified into five categories.

• Lifecycle-based Schemes

• Active Choice

• NPS Sanchay

• MSF

• 4A Schemes (Curated/Thematic Schemes).

Lifecycle-based Schemes comprise the existing Life Cycle Aggressive, Life Cycle 75 – High, Life Cycle 50 – Moderate and Life Cycle 25 – Low variants. The asset allocation among E, C and G Scheme will be automatically adjusted according to the age of the subscriber as per the age-asset allocation matrix approved by PFRDA.

Under Active Choice, the subscriber can determine the allocation of contributions among E, C and G, subject to the limits specified by the Authority. Equity and related instruments can have a maximum allocation of 75 per cent, while the limit is 100 per cent under Tier II. Corporate Bonds and Government Securities can each have up to 100 per cent allocation.

MSF schemes to be classified from Category A to E based on equity exposure, with uniform naming and disclosure requirements

The MSF category will comprise investment schemes launched by Pension Funds with the approval of the Authority. These schemes will be classified according to their equity allocation.

• Aggressive Growth: Very High Risk, with equity exposure of 80-100 per cent

• High Growth: High Risk, with 60-80 per cent;

• Balanced Growth: Medium Risk, with 35-60 per cent

• Conservative, with 10-35 per cent

• Debt (Government/Corporate Bonds), with 0-10 per cent equity exposure.

A Pension Fund can voluntarily offer up to two schemes under each category under each Tier.

The circular states, “Every scheme name shall clearly indicate the applicable Category code prescribed under this Circular.”

The subscriber-facing interfaces, including CRA platforms and other onboarding channels, will follow a uniform sequence for presentation and selection of investment schemes.

The sequence will be the type of scheme, category of the MSF scheme/lifecycle funds or asset allocation in case of Active Choice, and selection of the Pension Fund.

Before selection of a Pension Fund, schemes offered by various Pension Funds under the selected category will be displayed with information including scheme name, Pension Fund name, date of launch, historical returns, benchmark and comparative benchmark returns, applicable charges, Riskometer and assets under management.

A subscriber may hold only one scheme among Lifecycle-based Scheme or Active Choice at a time under the same PRAN. A subscriber may simultaneously hold investments in more than one MSF Scheme.

A subscriber can submit a maximum of two requests per Account for change of Pension Fund, Investment Scheme or any combination of the two in each financial year.

The circular also provides for merging of schemes. Where a subscriber has opted for multiple schemes, a scheme can be merged into another scheme, with the merged investment thereafter governed by the applicable provisions of the Target Scheme.

PFRDA said the circular has been issued “with a view to establishing a uniform and standardised framework for the classification and presentation of investment schemes under the NPS, thereby facilitating informed subscriber choice, enhancing comparability across Pension Funds and promoting consistency in the offering of investment schemes.”

The provisions of the circular will not apply to accounts tagged to the Government sector.

Disclaimer: This article is written purely for informational purposes and should not be considered investment advice from Upstox. Securities mentioned are illustrative and not recommendations. Investors should do their own research or consult a registered financial advisor before making investment decisions.