NPS 2.0 Brings More Control, Equity Options, and Early Withdrawals

The Pension Fund Regulatory and Development Authority (PFRDA) has launched the Multiple Scheme Framework (MSF) under NPS 2.0, giving investors more control over their retirement savings. Non-government subscribers can now choose low-, moderate-, or high-risk pension plans, with equity exposure up to 100% and withdrawals starting after 15 years instead of 60.

Leading pension funds like HDFC, Axis, ICICI Prudential, and Kotak have introduced schemes catering to all risk profiles, from conservative debt-focused to aggressive equity-heavy options.

Focus on Consistent Investing

NPS 2.0 allows investors to express their risk appetite while still following disciplined, long-term investing principles. Regular investments, regardless of market swings, enable compounding to build a meaningful retirement corpus.

High-Risk Options for Younger Investors

The new high-risk schemes with up to 100% equity are attractive for younger investors with long horizons. However, NPS is not a short-term product. The 15-year minimum vesting period ensures investors stay invested through market cycles, turning the lock-in into a feature rather than a limitation.

Risk-averse or near-retirement investors can continue with moderate or low-risk variants, focusing on stability with controlled equity exposure. Investors are advised not to switch funds impulsively or over-diversify simply because more options are available.

Streamlined Fund Nomenclature

PFRDA has revised the naming of Life Cycle Funds to improve clarity:

• Life Cycle 25 – Low
• Life Cycle 50 – Moderate
• Life Cycle 75 – High
• Life Cycle – Aggressive

Each name now clearly reflects the fund’s equity allocation, helping investors pick options aligned with their risk profile and retirement goals.

Enhanced Portfolio Flexibility

MSF allows subscribers to diversify across multiple schemes and pension funds under one PRAN. This improves transparency, flexibility, and portfolio management, combining the discipline of NPS with the customisation features usually found in mutual funds.

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Conclusion

NPS 2.0 empowers investors to personalise their retirement journey by choosing risk levels, equity exposure, and withdrawal timelines. With disciplined investing and periodic review of allocations, MSF can help build a robust retirement corpus while fostering long-term, sustainable investment habits.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.