PFRDA Clears Bank-Led Pension Funds, Revises IMF

The proposed framework seeks to remove regulatory constraints that have so far limited bank participation in pension fund sponsorship. It introduces clearly defined eligibility criteria based on net worth, market capitalisation and prudential soundness, aligned with Reserve Bank of India norms. This is intended to ensure that only well-capitalised and systemically robust banks are permitted to sponsor pension funds. Detailed eligibility norms will be notified separately and will apply to both new and existing pension funds.

PFRDA has also appointed three new trustees to the Board of NPS Trust following a formal selection process. The newly appointed trustees are Dinesh Kumar Khara, former Chairman of State Bank of India; Swati Anil Kulkarni, former Executive Vice President at UTI AMC; 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. Dinesh Kumar Khara has additionally been designated as Chairperson of the NPS Trust Board.

To align the pension framework with evolving market realities, public aspirations and international benchmarks, and to expand coverage across corporate, retail and gig-economy segments, PFRDA has revised the Investment Management Fee (IMF) structure for pension funds. The revised slab-based IMF will come into effect from 1 April 2026 and is designed to further safeguard subscriber interests.

Under the new structure, differentiated IMF rates will apply to government and non-government sector subscribers, including schemes under the Multiple Scheme Framework, with MSF corpus counted separately. The IMF for government sector employees under the composite scheme, or those opting for Auto Choice and Active Choice G 100, remains unchanged.

For non-government sector subscribers, the IMF will be linked to assets under management. Pension funds managing assets of up to Rs 250 billion will be allowed to charge an IMF of 0.12 per cent. For assets above Rs 250 billion and up to Rs 500 billion, the IMF will be 0.08 per cent. Funds with assets above Rs 500 billion and up to Rs 1.5 trillion will be subject to an IMF of 0.06 per cent, while those managing assets above Rs 1.5 trillion will be capped at an IMF of 0.04 per cent.

The Annual Regulatory Fee of 0.015 per cent payable by pension funds to PFRDA will remain unchanged. Of this, 0.0025 per cent of assets under management will continue to be passed on to the Association of NPS Intermediaries to support coordinated awareness, outreach and financial literacy initiatives under PFRDA’s overall guidance.

With increasing formalisation across India’s financial and pension sectors, PFRDA said these reforms are expected to help subscribers and stakeholders access a more competitive, well-governed and resilient NPS ecosystem, leading to improved long-term retirement outcomes and stronger old-age income security.