PFRDA's New NPS Scheme Categories: What Actually Changed

PFRDA is calling this standardisation. That word usually implies fewer things to understand. Here, subscribers are getting more categories to work through, not fewer.

The genuine win is elsewhere: for the first time, schemes from different Pension Funds have to be presented side by side on the same terms. The gain is comparability, not simplicity — and those are not the same thing.

What PFRDA Actually Changed

Circular No. PFRDA/2026/47/REG-PF/10, dated 28 August 2026, prescribes a single framework governing how every NPS investment scheme is classified, named, presented and disclosed. The same classification must be adopted across all subscriber-facing interfaces, including CRA platforms and PoP onboarding channels.

This consolidates rather than invents. The circular supersedes three earlier ones:

• The January 2022 circular on change of Pension Fund and asset allocation
• The September 2025 circular introducing the Multiple Scheme Framework
• The October 2025 circular rationalising lifecycle fund nomenclature

Two points of scope worth registering immediately. First, the framework does not apply to accounts tagged to the Government sector. If you are a central or state government employee under NPS, this circular is not about your account. Second, it governs classification, naming and presentation going forward — it does not push existing subscribers into a different scheme.

Two companion circulars carry the same date: one on operationalising the framework, and one revising the PoP charge structure for all schemes under NPS and NPS Lite, which takes effect from 1 October 2026.

The Five Scheme Types, in Plain Language

Every scheme under NPS now falls into one of five buckets:

• Lifecycle-based Schemes — the existing lifecycle variants, where allocation across E, C and G auto-adjusts with the subscriber's age against a PFRDA-approved matrix.
• Active Choice — the subscriber sets the split themselves. Equity is capped at 75% (100% under Tier II); corporate bonds and government securities may each go to 100%.
• NPS Sanchay — a composite scheme for the informal sector, following the investment pattern applicable to Government Sector schemes: up to 25% equity, 45% corporate bonds, 65% government securities, 10% short-term debt, and 5% asset-backed and miscellaneous investments.
• MSF — schemes launched by Pension Funds with PFRDA approval, now sorted into standardised equity categories. Every scheme launched under the Multiple Scheme Framework to date sits here.
• 4A Schemes — curated or thematic schemes under Regulation 4A of the Exit Regulations, such as NPS Vatsalya, NPS Swasthya and NPS MSME. Their allocation, charges and terms remain governed by their own guidelines.

The Lifecycle Naming Quirk Worth Flagging

The lifecycle labels do not rank by equity ceiling, which is the first thing most people assume they do.

"Aggressive" caps at 50% equity. "75 – High" allows 75%. Read the ceiling and the glide path, not the adjective.

The New MSF Risk Categories: A to E

This is the substantive change. Every MSF scheme now carries a category code determined by its equity allocation mandate.

Each MSF scheme maps to exactly one category. A Pension Fund may voluntarily offer up to two schemes in each category, per Tier.

The code is baked into the scheme name. The prescribed format is Pension Fund abbreviation + "NPS" + category code + scheme name — the circular's own illustrations are "XYZ NPS A Retirement Scheme" and "XYZ NPS E Retirement Scheme Tier 2". Pension Funds must also disclose the equity hierarchy prominently, with A highest and E lowest.

For a subscriber, this means the risk band is legible from the name itself, before any factsheet is opened.

What You Can and Cannot Hold at Once

• A PRAN is unique to a CRA, and a subscriber may hold multiple schemes under the same PRAN. Each account within a PRAN carries one scheme.
• Only one scheme may be held at a time from among Lifecycle-based Schemes and Active Choice, under the same PRAN.
• Multiple MSF schemes may be held simultaneously.
• A maximum of two requests per account per financial year for a change of Pension Fund, a change of scheme, or any combination. Doing both together counts as one request.
• For accounts held with corporate employers, the scheme-change facility is available only to the extent permitted under PFRDA's circular of 7 November 2025.

That two-request ceiling is the line most likely to catch someone out. It is a cap on requests, not on the number of things changed within a request — which means changing the Pension Fund and the scheme in a single instruction is cheaper against the limit than doing them a month apart.

Switching Versus Merging: The Vesting Trap

These two look similar on a screen and behave very differently.

Changing a scheme does not reset anything. The vesting period and the other conditions governing the account continue to run from the original account opening date.

Merging a scheme into another — the target scheme — is a different action. The merged investment is thereafter governed by the target scheme's provisions: its vesting rules, charges, partial withdrawal limits and other features.

The circular's own illustration makes it concrete. A subscriber opens Scheme A on 1 April 2026 with a 15-year vesting period and changes to Scheme B on 1 April 2029. Vesting continues to be counted from 1 April 2026, and the original account conditions, including the limit of four partial withdrawals, still apply. But if the Scheme A investment is instead merged into Scheme B on that date, Scheme B's conditions govern the merged investment from then on.

For anyone within sight of retirement and tidying up multiple schemes, that distinction is worth confirming before the instruction is submitted rather than after.

What Subscribers Will See When Picking a Scheme

Platforms must now follow a fixed selection sequence: scheme type → category or asset allocation → Pension Fund.

Before the Pension Fund is chosen, every scheme offered under the selected category must be displayed together, showing at minimum:

1. Scheme name
2. Pension Fund name
3. Date of launch
4. Historical returns
5. Benchmark and comparative benchmark returns
6. Applicable charges
7. Riskometer
8. AUM as on the last day of the previous month

For Active Choice and Lifecycle-based Schemes, that information is shown separately for each underlying asset class — equity, corporate debt and government securities.

This is the part of the circular that actually helps. Comparing Pension Funds previously meant assembling this yourself from several places. Now the platform has to put it in one view before the choice is made.

What This Doesn't Change

• Tax treatment is untouched. The deduction under Section 80CCD(1B) and the deduction on employer contributions under Section 80CCD(2) — the one salaried professionals most often leave unused — are unaffected by this circular. Availability depends on the tax regime chosen and on individual circumstances.
• Government sector accounts are outside scope.
• No existing subscriber is moved. Classification, naming and presentation change; holdings do not.

Charges continue to be governed by the annexure to the circular and by the separate PoP and investment management fee circulars. The annexure lists PoP and investment management fees together in a range of 0.24% to 0.32% p.a. of AUM for PoP subscribers and 0.04% to 0.12% p.a. for direct subscribers, CRA charges between ₹100 and ₹500, an NPS Trust fee of 0.003% p.a. of AUM, and custodian charges, with GST over and above.

Key Takeaways

• Five scheme types now formally exist: Lifecycle-based, Active Choice, NPS Sanchay, MSF and 4A Schemes.
• MSF schemes carry a standard A–E category code inside the scheme name, with A the highest equity band (80–100%) and E the lowest (0–10%).
• Multiple MSF schemes may be held at once, but only one Lifecycle or Active Choice scheme per PRAN.
• Two Pension Fund or scheme change requests are permitted per account per financial year; a combined change counts as one.
• Switching schemes preserves the original vesting date; merging schemes adopts the target scheme's terms instead.
• The framework does not apply to Government sector accounts, and does not change NPS tax treatment.
• Lifecycle labels do not rank by equity ceiling — "Aggressive" caps at 50%, "75 – High" at 75%.

Where to Start

The practical task is smaller than the circular's length suggests. If you hold one or more MSF schemes, check which category code they now carry. The name on your statement may look unfamiliar in the coming months even though nothing about the underlying scheme has changed.

Then decide whether the category still matches the horizon you are investing over. A risk profiling exercise is the usual starting point for that, and the allocation question sits alongside the rest of the picture covered in the 8 Freedoms Checklist.

If your NPS account has been running on a choice made at onboarding and never revisited, this is a reasonable moment to look at it properly — and that is a conversation rather than a form.

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