With the introduction of the Multiple Scheme Framework (MSF) under the National Pension System (NPS), retirement planning in India has been fundamentally reshaped. It marks a crucial shift—moving from a limited scheme option model to one offering unprecedented choice, personalization, and potential for higher growth.
Understanding this major shift is crucial for every non-government subscriber looking to maximize their retirement corpus.
The Single Scheme Focus
National Pension System (NPS) laid a strong, dependable foundation for retirement saving before the game-changing Multiple Scheme Framework. Subscribers consistently benefited from excellent tax deductions and expert professional management. The previous Single Scheme structure enforced a cap on equity exposure at a maximum of 75% mainly under the Active Choice option for subscribers up to 50 years of age; beyond this age, equity exposure tapered as per a matrix reducing risk with age. This design provided a regulated approach to equity exposure, reducing volatility risk over time and positioning NPS as a relatively conservative retirement saving option.
The Multiple Scheme Framework (MSF)
Multiple Scheme Framework (MSF) is a new architecture that allows non-government sector subscribers (including corporate, self-employed, and all-citizen models) to hold multiple schemes under their single Permanent Retirement Account Number (PRAN).
This framework not only changes asset allocation flexibility but also expands investment options and scheme design within NPS.
The Equity Option
The most headline-grabbing feature of the MSF is the introduction of a high-risk variant that allows for an equity allocation of up to 100%.
- Before MSF: Maximum equity exposure was capped at 75%.
- With MSF: PFMs can launch schemes with up to 100% equity allocation, subject to PFRDA approval, primarily aimed at subscribers with higher risk appetite, typically younger investors.
This change increases NPS’s competitiveness with market-linked investment avenues like mutual funds, while retaining NPS tax advantages and regulatory oversight.
Power of Portfolio Diversification
The core strength of the MSF lies in the ability to hold multiple schemes simultaneously.
A subscriber is no longer limited to one strategy. They can now:
- Blend Strategies: Allocate a portion of new contributions to a high-risk MSF scheme (100% equity) for aggressive long-term growth and, at the same time, allocate another portion to a low-risk Government Securities (G) fund or a moderate-risk corporate bond (C) scheme offered by the same or a different PFM.
- Tailor by Goal: Subscribers can allocate ongoing contributions to different schemes as per their evolving goals; however, switching accumulated corpus between MSF schemes follows standard PFRDA switch rules.
- Persona-Based Schemes: PFMs are empowered to launch specialized schemes tailored to the specific risk-return profile of various investor segments, such as digital-economy workers, entrepreneurs, or corporate employees.
Enhanced Transparency and Monitoring
Under the Multiple Scheme Framework, each specific MSF scheme—even those managed by the same PFM—will have its own distinct Net Asset Value (NAV), performance benchmark, and risk profile.
The CRA interface will display NAVs and performance of each MSF scheme separately, allowing subscribers to view scheme-specific performance under one PRAN dashboard.
Common Schemes vs. MSF Schemes
It’s important to understand that the original NPS scheme options (now often referred to as Common Schemes) continue to exist alongside the new MSF options. The table below highlights the key differences:
| Feature | Common Schemes (Active/Auto Choice) | Multiple Scheme Framework (MSF) Schemes |
|---|---|---|
| Equity Cap | Max 75% | Up to 100% (in high-risk variant) |
| Number of Schemes | Limited to one scheme per PFM selection | Can hold multiple schemes simultaneously |
| Investor Target | General, all-citizen segment | Non-Government Sector (Corporate, Self-Employed, etc.) |
| Fee Structure (Approx.) | Very Low (e.g., 0.09% AUM) | Slightly Higher (Capped at 0.30% AUM) |
| Vesting/Lock-in | Generally, until Age 60/Superannuation | Minimum 15-year vesting period OR Age 60 |
Note: The higher expense ratio in the MSF schemes is justified by the increased flexibility, specialized product design, and potentially more active management required to deliver differentiated strategies.
How to strategically plan under Multiple Scheme Framework
The MSF is not just a regulatory update; it’s a strategic opportunity. Here is how non-government subscribers can leverage the multiple scheme framework:
For the Aggressive Investor (Ages 25-40)
A majority of new contributions can be directed to a PFM’s high-risk MSF scheme with a 100% equity allocation. This is the optimal path to build a large retirement corpus through aggressive compounding over the initial growth phase of your career.
For the Balanced Investor (Ages 40-50)
Investors can maintain allocation in high-risk equity MSF schemes while gradually balancing new contributions with Moderate-risk (C-Scheme) blending equity and corporate bonds, thus de-risking the portfolio.
For the Conservative Investor (Ages 50+)
Contributions should be shifted predominantly to Low-risk variants (G-Scheme) or a Moderate MSF scheme, prioritizing capital preservation and stability over high-growth.
The Final Note
The MSF effectively converts the single-scheme account into a flexible, customized, and diversified retirement portfolio, giving the individual the freedom to act as their own pension fund manager within the regulated confines of the NPS. This evolution addresses the need for an NPS scheme that offers increased growth potential through higher equity exposure and continued tax-efficient savings.
The Multiple Scheme Framework is a clear signal that the National Pension System is adapting to the dynamic needs of modern private-sector investors, offering superior choice and the growth potential required to secure a substantial retirement.
Multiple Scheme Framework - Frequently Asked Questions (FAQs)
Q1: Is the Multiple Scheme Framework mandatory for all NPS subscribers?
No. The MSF is an optional framework available to non-government subscribers (All Citizen and Corporate Models). Existing subscribers can continue with their current Common Schemes.
Q2. Can I invest 100% of my money in equity under the NPS scheme?
Yes, under the new Multiple Scheme Framework (MSF), Pension Fund Managers are permitted to launch high-risk schemes that allow for equity allocation of up to 100% for new contributions.
Q3. Are the charges higher for MSF schemes?
Yes. The fund management charges for schemes under the MSF are capped at a maximum of 0.30% of Assets Under Management (AUM), which is slightly higher than the very low charges of the older Common Schemes.
