Business EconomyPosted at: Oct 24 2026 7:33PM


PFRDA bets on mutual fund distributors, digital rails to scale up NPS

Bengaluru, Oct 24 (UNI) The Pension Fund Regulatory and Development Authority (PFRDA) is turning to mutual fund distributors and digital platforms to address a fundamental challenge confronting the National Pension System (NPS) — how to expand its reach when the low cost of the product leaves limited room for conventional distribution economics.
PFRDA Chairperson S. Ramann said the scheme's reach and distribution remained its biggest challenge, prompting the regulator to develop digital channels that reduce customer acquisition costs and make it easier for distributors to bring subscribers into the pension system.
Addressing an outreach programme for mutual fund distributors under the StAR NPS platform here on Saturday, Ramann said NPS charged around 0.2 per cent annually on assets under management (AUM), significantly lower than mutual funds, but this very cost advantage had made the product harder to market through conventional distribution channels.
“If we have 60 crore people with a savings bank account, we must also have 60 crore people with an NPS account,” he said, underlining the scale of the opportunity for expanding pension coverage.
The strategy centres on bringing mutual fund distributors into the pension ecosystem through StAR NPS, a digital platform developed by BSE Technologies Pvt Ltd. It allows distributors to register online, choose a Point of Presence and begin onboarding subscribers, with digital verification and account-opening processes designed to reduce friction.
The platform facilitates verification through CKYC and DigiLocker, routes contributions directly to the Trustee Bank and enables instant generation of a Permanent Retirement Account Number through integration with Central Recordkeeping Agencies.
The move reflects PFRDA's effort to leverage an existing distribution network rather than build an entirely new one to reach potential pension subscribers. However, the commercial viability of the model will depend on whether lower onboarding costs and earnings linked to assets mobilised can provide distributors with sufficient incentives to actively market NPS.
Alongside distribution reforms, PFRDA is seeking to make the scheme more attractive through changes to investment and exit conditions.
Ramann said subscribers could remain invested until the age of 85 and exit after a minimum vesting period of 15 years, subject to applicable rules. He argued that longer investment horizons allowed subscribers to benefit from the power of compounding.
Under the revised exit provisions outlined by PFRDA, subscribers with a corpus of up to Rs 8 lakh can withdraw the entire amount as a lump sum at normal exit. Non-government subscribers with a corpus exceeding Rs 12 lakh can withdraw up to 80 per cent as a lump sum, while at least 20 per cent must be used to purchase an annuity.
Pension funds can also offer schemes with up to 100 per cent equity exposure for younger subscribers, Ramann said. Employer contributions of up to 14 per cent of an employee's basic pay and dearness allowance to NPS qualify for a tax deduction under the new tax regime, subject to applicable provisions.
PFRDA is also broadening its product offering through NPS Vatsalya, which enables parents to save for their children, and NPS Swasthya, launched on October 1, which combines a pension account with a super top-up health insurance policy.
The authority has additionally introduced Tatkal NPS, enabling customers to open accounts and contribute through UPI applications such as BHIM and PhonePe.
The Bengaluru outreach programme brought together distributors and pension-sector representatives to discuss onboarding, distribution and subscriber servicing. PFRDA said it would continue similar initiatives across the country to widen NPS coverage.
For the regulator, the challenge is no longer simply to offer a low-cost retirement product, but to build a distribution network capable of taking it to millions of households.
UNI BDN
Tags: #PFRDA bets on mutual fund distributors# digital rails to scale up NPS
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Bengaluru, Oct 24 (UNI) The Pension Fund Regulatory and Development Authority (PFRDA) is turning to mutual fund distributors and digital platforms to address a fundamental challenge confronting the National Pension System (NPS) — how to expand its reach when the low cost of the product leaves limited room for conventional distribution economics.

see more..