The National Pension System (NPS) has expanded investment flexibility through the Multiple Scheme Framework (MSF), which allows pension fund managers to introduce schemes with up to 100% equity exposure. According to reports from Mint, this represents a significant departure from the traditional NPS structure that capped equity investments at 75% under the Active Choice option. The new framework, implemented from 2025, provides pension fund managers with greater flexibility to offer specialized investment strategies tailored to different investor profiles.
Under the MSF framework, non-government subscribers can hold multiple schemes simultaneously using the same Permanent Retirement Account Number (PRAN). As reported by Mint, this allows investors to direct larger portions of new contributions to high-risk equity schemes while maintaining allocations to government securities or corporate bond schemes. The framework retains the existing structure where investors can select one scheme per Pension Fund Manager under common schemes, while MSF enables simultaneous holding of multiple schemes from different managers.
The MSF framework offers greater flexibility for investors to choose schemes based on their risk appetite, financial goals, and life stage. According to Mint, each MSF scheme maintains its own Net Asset Value (NAV), benchmark, and risk profile, making it easier to track individual scheme performance. The framework preserves NPS's regulated structure and existing tax benefits for eligible Tier-I contributions, while allowing pension fund managers to offer specialized strategies for different investor groups.
Investors should carefully evaluate their risk tolerance before selecting the 100% equity option, considering factors like age, income stability, dependents, and existing equity investments. As reported by Mint, MSF schemes can charge fund management fees of up to 0.30% of AUM, compared to approximately 0.09% for some common schemes. The framework includes a minimum vesting period of 15 years or until the subscriber reaches 60, whichever is earlier, and investors must actively choose future contribution allocations across schemes rather than relying on automatic adjustments.
According to Mint, investors can direct larger shares of contributions towards equity early in their careers and gradually increase stable allocations as retirement approaches. The framework allows for regular contributions to help spread market volatility impact, though investors should not assume automatic equity exposure reduction as they approach retirement. Under MSF, investors must actively choose how future contributions are allocated across schemes, requiring ongoing portfolio management decisions throughout their investment journey.
