For years, the National Pension System (NPS) has been a reliable companion for Indian savers, offering two trusted paths to build a nest egg: Auto Choice, where your portfolio matures gracefully alongside you, and Active Choice, where you take the lead in deciding your asset mix. These options have helped millions build secure futures with disciplined, low-cost investing.
But in late 2025, the PFRDA introduced a new chapter: The Multiple Scheme Framework (MSF).
Since its launch, a common question has dominated investor circles: "Is Active Choice and MSF the same thing?" While both offer you control over your money, they are fundamentally different tools. Understanding this distinction is the key to unlocking a 100% equity portfolio and a personalized retirement journey that was never possible before. Let’s dive into how these two features work together to give you ultimate flexibility.
What is Active Choice & MSF?
To understand the new, we must respect the old. Active Choice has been the backbone of the NPS for years. It was designed for the investor who says, "I know my risk appetite better than a formula does."
In Active Choice, you decide the percentage of your contribution that goes into four asset classes:
- Asset Class E (Equity): High risk, high reward.
- Asset Class C (Corporate Debt): Medium risk.
- Asset Class G (Government Bonds): Low risk.
- Asset Class A (Alternative Assets): Real estate or private equity (capped at 5%).
The Catch? Even in Active Choice, the government puts "guardrails" on you. For most private citizens, you cannot put more than 75% in Equity. Under the earlier single-scheme structure, all your contributions in a given Tier and investment choice (Active or Auto) were managed by a single Pension Fund Manager (PFM).
While, Multiple Scheme Framework or MSF is a separate layer of the NPS ecosystem. It was created to give investors more flexibility than the "Common Schemes" (Active and Auto Choice) ever could.
MSF isn't just about picking percentages; it’s about picking multiple distinct strategies under one PRAN (Permanent Retirement Account Number). Think of it as a "Super-Active" mode.
Three Pillars of Multiple Scheme Framework
- The 100% Equity Breakthrough: Unlike Active Choice, certain schemes under MSF allow you to go up to 100% in Equity. This is a dream come true for young investors with high risk-tolerance.
- Fund Manager Freedom: For the first time, you don’t have to put all your eggs in one basket. You can have a "Growth Scheme" with HDFC Pension Fund and a "Safety Scheme" with SBI Pension Fund—all within the same account.
- Specialized Themes: MSF enables PFMs to launch schemes with diverse strategies (e.g., aggressive growth or balanced profiles) tailored to investor needs, beyond standard Active Choice options.
Head-to-Head: Active Choice vs. MSF
To make your decision easier, let’s look at the critical differences side-by-side:
| Feature | Active Choice (Common Scheme) | Multiple Scheme Framework (MSF) |
| Equity Limit | Capped at 75% | Can go up to 100% |
| Fund Manager | Up to 3 PFMs across assets | Multiple PFMs for different schemes |
| Lock-in Period | Until age 60 (standard) | Minimum 15-year vesting period for new flows |
| Cost (Expense Ratio) | Extremely low (~0.09%) | Slightly higher (~up to 0.30%) |
| Asset Allocation | Managed by you (E, C, G, A) | Managed by the Scheme’s specific mandate |
| Flexibility | Change allocation 4 times/year | Invest across schemes (switch limit 15 years) |
| Also Read: How the 15-Year Rule and Tier II Changes Impact Your MSF Strategy |
Why the 15-Year Rule Changes Everything
There is a significant "fine print" you must know. While Active Choice follows standard NPS exit rules, the Multiple Scheme Framework imposes a 15-year minimum vesting period for switching between its schemes.
This means MSF is specifically designed for long-term wealth creation. If you are 55 years old and looking to retire in five years, MSF might not be for you. But if you are a 30-year-old gig worker or professional looking to maximize returns over two decades, the MSF framework is your best friend.
How to Choose: Which Path is Yours?
Choose Active Choice If:
- You want the lowest possible management fees in NPS.
- You are comfortable with a 75% equity cap.
- You prefer the simplicity of dealing with one fund manager.
- You are closer to retirement and don't want a new 15-year lock-in.
Choose Multiple Scheme Framework If:
- You are an aggressive investor who wants 100% equity
- You want to diversify your risk across different fund managers (e.g., using ICICI for equity and LIC for bonds).
- You are a young professional with at least 15–20 years left in your career.
- You want access to specialized "themed" investment strategies.
Impact on Your Retirement Portfolio
The introduction of MSF alongside Active choice means that the NPS is no longer a "boring" pension product. It has evolved into a sophisticated investment tool that rivals Mutual Funds. By using a mix of both, you can create a "Core and Satellite" strategy:
- Core: Your Active Choice account for steady, low-cost growth.
- Satellite: An MSF scheme for high-growth, 100% equity exposure to beat inflation.
A New Era of Freedom
The confusion between Active Choice and the Multiple Scheme Framework usually stems from the fact that both offer "choice." However, Active Choice is about adjusting the knobs on a single machine, while MSF is about owning multiple machines at once.
If you’ve felt restricted by the 75% equity cap or wanted to try a different fund manager without moving your entire life savings, the MSF is the answer you’ve been waiting for.
Frequently Asked Questions (FAQs)
Q1: Can I have both Active Choice and MSF at the same time?
Yes! The new framework allows you to keep your existing "Common Scheme" (Active/Auto) and also subscribe to "Multiple Schemes" under the MSF umbrella.
Q2: Is MSF more expensive than Active Choice?
Slightly. While Active Choice has an expense ratio of around 0.09%, MSF schemes are allowed to charge up to 0.30% because they require more active management and specialized research.
Q3: Can I switch my entire NPS balance from Active Choice to MSF?
Yes, you can migrate your units from Active Choice to MSF, but switching between MSF schemes is restricted during the 15-year vesting period for new MSF contributions.
Q4: Does MSF offer the same tax benefits?
Yes. Both frameworks fall under the NPS umbrella, meaning you still get the tax deductions under Section 80CCD(1) and 80CCD(1B).
Q5: Who regulates the Multiple Scheme Framework?
Just like all NPS products, MSF is strictly regulated by the PFRDA (Pension Fund Regulatory and Development Authority) to ensure your money is safe.
