Banks Empowered to Boost National Pension System: A New Era for Retiree Security

The Pension Fund Regulatory and Development Authority (PFRDA) now allows banks to establish pension funds to enhance competition and protect subscribers' interests in the National Pension System. By revising investment management fees and appointing new trustees, the reforms aim to create a robust pension ecosystem.

The Pension Fund Regulatory and Development Authority (PFRDA) has announced a significant policy shift, enabling Scheduled Commercial Banks (SCBs) to independently establish pension funds to manage the National Pension System (NPS). This move is aimed at increasing competition and securing subscriber interests.

This framework marks a departure from existing regulations, which have restricted bank participation in sponsoring pension funds. It introduces eligibility criteria emphasizing net worth and market stability in accordance with Reserve Bank of India (RBI) norms.

Furthermore, PFRDA has adjusted the Investment Management Fee structure, effective from April 1, 2026, to encompass differentiated rates for government and non-government sector subscribers, aligning pension funds with both national and international standards.

(With inputs from agencies.)