New Delhi: Pension regulator PFRDA on Thursday allowed banks to independently set up pension funds to manage the National Pension System (NPS) to boosting competition and protecting subscriber interests.
Under the existing rules, banks faced regulatory constraints in sponsoring pension funds. A pension fund acts as an intermediary that receives contributions, manages investments and makes payouts to subscribers in line with regulations. In a statement, the PFRDA said its board has approved, in principle, a framework permitting Scheduled Commercial Banks (SCBs) to establish pension funds for managing NPS. The objective is to strengthen the pension ecosystem, widen participation and improve governance standards.
The proposed framework seeks to remove barriers that earlier limited bank participation, while introducing strict eligibility norms. These will be based on net worth, market capitalisation and prudential soundness, aligned with RBI guidelines, to ensure that only well-capitalised and systemically robust banks can sponsor pension funds. Detailed criteria will be notified separately and will apply to both new and existing pension funds. Currently, 10 pension funds are registered with the regulator.
Separately, PFRDA has revised the Investment Management Fee (IMF) structure for pension funds, effective April 1, 2026. The revised slab-based IMF introduces differentiated rates for government and non-government subscribers and will also apply to schemes under the Multiple Scheme Framework, with corpus counted separately. The Annual Regulatory Fee of 0.015 per cent payable to PFRDA will remain unchanged.
The regulator said the reforms are expected to create a more competitive, resilient and well-governed NPS ecosystem, improving long-term retirement outcomes and old-age income security.