PFRDA to Merge NPS Scheme A With Schemes C and E; Subscribers Given Free Switch Option Till December 25

PFRDA to Merge NPS Scheme A With Schemes C and E; Subscribers Given Free Switch Option Till December 25

Pension Fund Regulatory and Development Authority (PFRDA) has announced an important change for National Pension System (NPS) subscribers who had opted for Scheme A under Tier I (Active Choice).

After a detailed review of the scheme’s performance and structure, PFRDA has proposed to merge Scheme A with Schemes C and E, citing subscriber interest and long-term retirement stability.

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According to the official communication, Scheme A currently has a relatively smaller corpus and limited investment avenues. Post-merger, subscriber contributions will become part of larger and more diversified portfolios under Schemes C and E, which is expected to reduce concentration risk and improve overall portfolio stability.

PFRDA stated that larger schemes offer better portfolio management flexibility and efficiency, supporting improved risk-adjusted returns over the long term. The merger is also aimed at addressing liquidity concerns, as some assets under Scheme A involve longer lock-in periods. After the merger, investments will move into schemes with higher liquidity, making withdrawals and switches smoother for subscribers.

The regulator said the decision aligns with ongoing market reforms and SEBI-led changes, including simplification of asset classifications and expansion of the permissible investment universe. These reforms are intended to modernise the NPS investment framework, enhance diversification, and create a more efficient scheme architecture.

PFRDA emphasized that the move is being made in the best interest of subscribers, particularly in the context of growing long-term pension capital and India’s broader focus on formalisation, financialisation, and pensionalisation of the economy. The authority believes the merger will help NPS investments integrate more effectively with India’s long-term growth while strengthening old-age income security.

To ensure flexibility, PFRDA has provided a one-time, cost-free option to affected subscribers. Those who had chosen Scheme A under Tier I can switch their accumulated wealth to any other asset class of their choice without any additional charges. This option will remain available until December 25, 2025, subject to applicable guidelines.

Subscribers have been advised to review their investment preferences and exercise the switch option, if desired, within the stipulated timeline.