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PFRDA clarifies Corporate NPS rules, requiring mutual agreement for Pension Fund choices, annual reviews, employee investment options, grievance process, etc.
PFRDA Updates Corporate NPS Norms, Clarifies Fund Selection and Employee Decision-Making
The Pension Fund Regulatory And Development Authority (PFRDA) has addressed confusion among corporate employers about choosing Pension Funds and investment options for employees under the Corporate NPS, especially in cases where employers also contribute. The confusion arose following the regulator’s circular on September 12, 2025.
NPS Corporate Sector Model offers a robust platform for employers to extend old age social security benefits to their employees, allowing for flexible contributions from both employer and employee.
Key Points By PFRDA In The Circular:
1, Mutual Agreement Needed
When both employer and employee contribute, or when only the employer contributes, decisions on Pension Fund and investment schemes must be made through a formal mutual agreement between management and employees.
2. Annual Review of Pension Fund
The employer must review the chosen Pension Fund every year.
Any change should follow the conditions in the mutual agreement.
Long-term returns (20–30 years) should guide decisions, not short-term market movements.
Employers must discuss and educate employees properly during decision-making.
3. Employees Can Still Invest Voluntarily
Apart from the joint arrangement, employees may separately choose to invest in NPS Common Schemes or Multiple Scheme Framework (MSF) options on their own.
4. Employees Must Have Enough Choice
The agreement should ensure different scheme options within a Pension Fund so employees with different risk levels are covered.
5. Grievance Process
First complaint goes to the company’s HR.
It can be escalated only if the employee shows proof that HR did not act.
6. Full Freedom Option
Employers can decide to give employees complete control over Pension Fund and scheme choice, skipping mutual agreement.
8. Role of PoPs (Points of Presence)
Corporates should work with PoPs to provide NPS services as per PoP regulations.
9. Communication Protocol
PoPs must inform CRAs in writing about choices agreed mutually.
Public sector PoPs should do this only after internal circulars are issued.
10. CRAs Must Wait for Employer Instructions
CRAs cannot make any changes unless the employer instructs them.
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
November 16, 2025, 15:05 IST
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