NPS Pension: New rules for investing in NPS, what is Multiple Scheme Framework Scheme

The pension fund regulator, FRDA, has made a significant change to the rules for corporate NPS. Employees can now choose to invest 100% of their funds in riskier equity funds under a multiple scheme framework, but the employee will have to make this additional contribution separately.

Under current rules, contributions to the Corporate NPS are typically made jointly by the employer (company) and the employee. In some cases, both contribute, and in others, only the employer contributes. The PFRDA has now clarified that contributions agreed upon between the company and the employee cannot be transferred to a scheme with a multiple scheme framework. If the employee wishes to invest 100% in a risky equity fund, they must make a separate voluntary contribution.

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PFRDA has allowed NPS members to invest in multiple schemes simultaneously (multiple scheme framework) since October 1 this year. This feature has been introduced only for non-government members. Previously, investors were allowed to choose only one scheme per tier account.

Investors will now be able to invest in different schemes, including higher-risk equity funds and safer debt fund schemes. Under the new system, investors can now invest up to 100% in equities. Previously, this limit was 75%. This means that investors willing to take on risk for higher returns can choose this option.

Written consent required

Under the new rules, employers and employees will now jointly decide which pension fund and investment plan to choose. Previously, in many companies, this decision was made solely by the employer, but now mutual consent between both parties will be mandatory. This decision will need to be put in writing. The chosen fund will also be reviewed annually.

Will be able to complain

If an employee believes a fund has been selected without their consent, they can file a complaint. A two-stage process has been established. The employee will first file a complaint with the HR department. If the issue is not resolved there, they can then proceed to the PFRDA.

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