NPS New Rules: There is important news for people investing in the National Pension System (NPS). Pension Fund Regulatory and Development Authority (PFRDA) has prepared a new framework regarding NPS schemes. Its objective is to make it easier to understand and compare the risks and potential returns of different schemes.

Under the new rules, schemes under the Multiple Scheme Framework (MSF) will be classified into different categories based on equity exposure. This will help investors understand how much stock market risk a scheme carries.

There will be new classification of schemes in 30 days

PFRDA, in its instructions issued on August 28, 2026, has given time to pension funds to make necessary changes in the name and classification of existing MSF schemes. Pension funds will have to conform their schemes to the new standardized framework within a stipulated period.

The purpose of this change is to present the different schemes in NPS in a uniform manner, so that investors can understand the risk and investment strategy rather than making decisions based only on name or past performance.

Categories from A to E for MSF Schemes

In the new arrangement, the schemes under MSF will be placed in five categories based on the level of investment in equity. The greater the equity exposure, the greater the impact of market fluctuations.

• Category A: Aggressive growth scheme with highest equity exposure.


• Category B: Growth based option with relatively higher equity.


• Category C: A scheme with balanced exposure between equities and other assets.


• Category D: Relatively conservative scheme with low equity exposure.


• Category E: Option with lowest equity exposure, with higher debt impact.

What will happen if there are more schemes in the same category?

In the new framework, the number of schemes in each category by a pension fund has been limited. If a fund has more schemes than the prescribed limit in any one category, it may have to undergo the process of merging, amalgamating or restructuring the additional schemes.

This means that the name or structure of the existing scheme of some investors may change in the future. However, mere change in the name or classification of the scheme does not mean that the investor will lose money. The real thing will be what is the investment pattern of the new or merged scheme.

Why should investors be cautious about a merger?

Change in investment strategy is possible in case a scheme is merged with another scheme. Especially the share of equity may be more or less than before. In such a situation, the total risk of the investor can also change.

Therefore, if the name of the scheme of your NPS account changes or it is merged with another scheme, then the name of the new scheme Asset Allocation, Equity Exposure and Risk Profile Must check.

In Active Choice, investors will get the facility of allocation as per their choice.

In the Active Choice option of NPS, the investor can divide his money among Equity (E), Corporate Bonds (C) and Government Securities (G) as per his choice and risk appetite. Therefore, an investor with a higher risk appetite can keep a relatively higher stake in equity, while an investor with a lower risk appetite can give more importance to debt based options.

Investment pattern changes with age in Lifecycle scheme

Lifecycle based NPS schemes offer different options for investors who want to automatically de-risk their portfolio over time. In this, as the age of the investor increases, the ratio of equity and debt keeps changing as per the prescribed rules.

Thus, exposure to equities can remain relatively high for high growth at young ages, while the share of relatively safe assets in the portfolio can be increased as one approaches retirement.

How will NPS investors benefit from the new rules? (NPS New Rules)

The biggest advantage of this change could be that it will be easier to understand the schemes of different pension funds on the basis of a uniform classification. Investors will be able to see the name of the scheme as well as its risk level and equity exposure.

However, it is not right to rely only on past returns while choosing any NPS scheme. It is also important to keep in mind the investment period, age, time of retirement, risk tolerance and asset allocation of the entire portfolio.

What should investors do now?

If you are already investing in NPS then there is no need to panic. After the upcoming changes, do check the new name and classification of your scheme on your CRA portal or the official platform linked to NPS. If schemes are merged or restructured, the investment strategy and equity exposure of the new scheme must be matched with that of the old scheme.