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Summary: NPS has quietly expanded what non-government subscribers can do with their retirement money, but the headline number is not the whole story. Before you act on what you've read elsewhere, there are two rules that change the calculation entirely.
If you hold an NPS account in the private sector, you’ve probably seen the headline: NPS now lets you put 100 per cent of your money in equity. For a product that capped equity at 75 per cent for its entire existence, that sounds like the change long-term investors were waiting for. It is real. But two rules decide whether it actually helps you, and most of the coverage has skipped past both.
Here’s what actually changed. From October 1, 2025, the PFRDA introduced the Multiple Scheme Framework (MSF) for non-government subscribers — the All Citizen and Corporate models. Under it, pension funds offer schemes in moderate and high-risk variants, and the high-risk variant can hold up to 100 per cent equity. Your old NPS account didn’t change at all. Those are now called ‘Common Schemes’, and they keep the 75 per cent equity cap. To get to 100 per cent, you have to open a new scheme under MSF; you cannot dial your existing account up to full equity. That is the first thing the ‘100 per cent equity!’ headlines bury — the new ceiling applies only to fresh money in a new scheme, not the corpus you’ve already built.
The second rule is the one that matters more. MSF schemes carry a minimum vesting period of 15 years. During those 15 years, you can switch out of an MSF scheme into a Common Scheme, but you cannot switch freely between MSF schemes — that flexibility only opens up after 15 years or at normal exit. So the product being marketed as ‘more freedom’ actually locks your choices down harder than the Common Scheme does, in exchange for the higher equity ceiling. For a 30-year-old, a 15-year horizon is fine. For someone closer to a goal, it’s a real constraint.
Then there’s the money you get back, which has its own wrinkle. PFRDA’s 2025 exit rules let non-government subscribers take up to 80 per cent as a lump sum at exit, with a minimum of 20 per cent going to an annuity, up from the old 60/40 split. Genuinely more cash in your hands. But the tax law hasn’t caught up: only 60 per cent of the corpus is currently confirmed tax-free. The extra 20 per cent you’re now permitted to withdraw sits in a grey zone until the Finance Ministry clarifies its treatment. So ‘I can take 80 per cent out’ and ‘80 per cent is tax-free’ are two different statements, and only the first is true today. If your corpus is Rs 8 lakh or less, you can take the whole thing; between Rs 8-12 lakh, the rules ease too — the annuity squeeze mainly bites above Rs 12 lakh.
On cost, the news is good and uncomplicated. MSF schemes are capped at 0.30 per cent of assets a year (with a small incentive provision that can take it slightly higher for certain funds). That’s a touch above the rock-bottom fees of old NPS but still far below what an equity mutual fund charges. Low cost was always NPS’s strongest card, and MSF keeps it.
So, who is this actually for? If you’re young, comfortable with a 15-year-plus horizon, and want maximum equity at a fraction of mutual fund cost, MSF is a strong addition to your retirement stack. If you’re within 10-15 years of needing the money, or you value the ability to reshuffle schemes on short notice, the rigidity should give you pause, and the existing Common Scheme, at 75 per cent equity, may serve you better. Either way, don’t open an MSF scheme expecting your existing NPS balance to come along for the ride. It won’t.
The honest summary: NPS just became a far more serious wealth-building tool for the right person. Just go in knowing the 100 per cent equity number is the part that sells it and the 15-year lock and the tax grey zone are the parts that should decide it.
Also read: NPS gets an upgrade with 100% equity option. What changes?
This article was originally published on June 05, 2026.
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