When you think about retirement planning, you are really thinking about one thing: will my future income be enough to support the life I want? For many Indians, the National Pension System (NPS) has become an important tool for building a long-term retirement pension.
The introduction of the Multiple Scheme Framework (MSF NPS) changes how you can build that pension. It allows you to hold and manage several schemes under one Permanent Retirement Account Number (PRAN) across different Central Recordkeeping Agencies (CRAs), instead of being limited to a single investment choice per tier. This is especially relevant if you are serious about growing and protecting your retirement corpus over decades.
The Basic Architecture: One PAN, Multiple Schemes
Under the earlier structure, a subscriber normally had only one scheme option per tier with one CRA. The MSF shifts this by:
Allowing multiple NPS schemes to sit under the same PAN
Letting you operate multiple schemes through your single PRAN linked to your PAN across CRAs.
Keeping your identity consistent while widening your choice of schemes
Charges, Incentives, and What They Mean for Your Corpus
Costs eat into any investment, so the fee structure under MSF matters a lot for your final retirement benefits.
Capped charges
The framework keeps charges on the lean side:
Total charges on a scheme launched under MSF can go up to 0.30% of Assets Under Management (AUM) per year.
These are consolidated at scheme level and collected by the Pension Fund, while custodian, CRA and NPS Trust charges are kept separate as prescribed by the regulator.
Performance-linked incentive
There is also a small performance-linked incentive built into the framework:
A Pension Fund can earn up to 0.10% of AUM per year as an additional incentive on an MSF scheme.
This is available only if at least 80% of the scheme’s subscribers are new entrants to NPS.
The incentive is reviewed after every 12-month period from the date of approval.
It runs for a maximum of three years from approval of the scheme or until the scheme reaches fifty lakh subscribers, whichever happens first.
This structure nudges Pension Funds to expand outreach and bring more new savers into the system, without directly promising higher returns to you as a subscriber.
Risk Variants, Equity Exposure and the Role of Time
Risk is central to any retirement planning decision. MSF introduces a more nuanced pattern here as well.
Moderate and High-Risk Variants
For each target persona, schemes are expected to offer two risk variants – Moderate and High. Pension Funds may also introduce a Low-Risk option if they wish. Risk-profiling of subscribers is expected to consider income and socio-economic factors so that the chosen scheme matches the individual’s profile.
Under the high-risk option, equity exposure can go up to 100%. That level of exposure may suit younger investors who have a long time horizon and can handle volatility, but would not be appropriate for everyone.
Minimum Vesting Period
MSF schemes come with a minimum vesting period of 15 years, which is the earliest period after which subscribers can exit, with the full exit option available at age 60 or retirement. This long horizon is consistent with the idea of slowly building a retirement corpus rather than chasing quick gains.
Documentation and Transparency: The “NPS Scheme Essentials”
MSF also focuses heavily on clear documentation. Every new scheme has to publish a standard information document called “NPS Scheme Essentials”, which must cover:
Scheme name
Objectives
Asset allocation
Risks
Vesting provisions
Switching rules
Exit options
Fee and charge structure
Benchmarking framework
Details of the Fund Manager
For a subscriber trying to compare options within the NPS – rather than hopping between unrelated products in the broader MSF in banking space – this uniform format makes life much easier. You can review the same type of information across schemes without guessing what has been left out.
Where MSF Fits in Your Overall Retirement Planning
MSF does not replace the need for emergency savings, insurance, or other investments. It does, however, offer a regulated, tax-linked pension avenue where:
Multiple schemes can be held under one PAN
Risk and time are built into the design through moderate/high variants and a long vesting period
Costs are clearly capped and disclosed
Documentation is standardised via the NPS Scheme Essentials
Oversight by PFRDA and NPS Trust provides an additional layer of comfort
Used thoughtfully, MSF NPS can become a core pillar of your retirement pension strategy, while other products play supporting roles around it.
Conclusion
Ultimately, the Multiple Scheme Framework turns NPS from a rigid pension product into a flexible retirement partner. By capping costs, defining clear rules and widening risk choices, it helps you shape a retirement corpus that reflects your own life story. Used with discipline, MSF NPS can anchor long term, goal based retirement planning.
Frequently Asked Questions
1. What is the key advantage of the Multiple Scheme Framework for my retirement corpus?
MSF lets you hold more than one NPS scheme under the same PAN, with different risk profiles and objectives. This helps you diversify your retirement corpus within NPS itself instead of depending on a single scheme.
2. How much can a Pension Fund charge me under MSF?
For schemes launched under this framework, total charges at scheme level can go up to 0.30% of AUM per year, with custodian, CRA, and NPS Trust charges applied separately as per regulations.
3. Are there any incentives for Pension Funds under MSF NPS?
Yes, a Pension Fund can earn an additional incentive of 0.10% of AUM per year if at least 80% of subscribers in that scheme are new to NPS. This is reviewed every 12 months and is available for up to three years or till the scheme reaches fifty lakh subscribers, whichever is earlier.
4. What is the minimum vesting period in these schemes?
MSF schemes have a minimum vesting period of 15 years, with the option to exit at age 60 or at the time of retirement, in line with existing regulations.
5. What happens if my MSF scheme is discontinued?
If a scheme is discontinued, you can choose to shift your funds to another eligible scheme. If you do not make a choice, your funds will be transferred automatically to the Tier I account under the Auto Choice LC 50 option of the same Pension Fund.
