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Informist, Thursday, Nov. 27, 2025

 

--PFRDA head: In talks with PhonePe to integrate UPI with new pension scheme

--CONTEXT: PFRDA Chairman S Ramann's comments at an event in Mumbai

--PFRDA Chair: Many banks have applied to become pension fund managers

 

MUMBAI – Several leading banks have submitted applications to the Pension Fund Regulatory and Development Authority seeking approval to become pension fund managers, Chairman Sivasubramanian Ramann told Informist on the sidelines of an event here. The move underscores the growing interest in the National Pension System as a long-term business opportunity and comes at a time when the regulator is aggressively pushing to widen retirement planning coverage across corporate, micro, small, and medium enterprises, gig workers, and farmer organisations, Ramann said.

 

The chairman said "a few very large banks which are today not present" in the fund management segment have already approached PFRDA with formal proposals. He declined from naming the institutions, but said that banks have now understood the long-term, thriving nature of pension management in India. "Two of them have even met me giving their applications...that will happen," he said, signalling that new licences are likely to be granted in due course.

 

Until now, pension fund management has been dominated by a smaller set of financial institutions, but rising interest of heavyweight banks could deepen competition, bring in more capital, expand distribution networks, and accelerate customer acquisition, Ramann said. PFRDA is also working to integrate the new pension scheme with the unified payments interface on the payments application PhonePe, the chairman said. "We need NPS to be as easy as UPI," he said. "If people can pay for groceries digitally, they should be able to pay into their retirement account in the same way."

 

According to the chairman, equity contributions under the market-linked schemes have surged nearly 30% over the first six months of the current financial year, even though the overall assets under management expanded only 16–17% due to volatility in the equity market. "When we evaluated progress at the end of the half-year, contribution growth was strong, but market movements capped AUM growth. Still, I am very happy because equity participation has gone up sharply," he said.

 

After allocation to equity was raised to up to 25% in April, the overall equity proportion in National Pension System-managed funds has now climbed to 18%. Notably, some of the newly introduced multiple scheme feature schemes allow 100% equity allocation, and these have "done exceedingly well," according to the regulator.

 

However, the share of 100% equity schemes in the total corpus remains "very small" at present, partly due to ongoing integration challenges at the central recordkeeping agencies. With digital processes yet to be fully synchronised, onboarding, switching, and scheme-selection continue to undergo re-engineering.

 

Ramann expects this bottleneck to clear within the next 10 days, after which the flow into multiple scheme feature-based equity products is expected to accelerate. "Once systems go fully digital, MSF (multiple scheme feature) schemes will move much more smoothly," he said.

 

One of the regulatory priorities now is the launch of a structured payout product -- a long-awaited innovation that will allow subscribers an alternative to traditional annuities when withdrawing their retirement corpus. A consultation paper has already been published outlining three payout models. The PFRDA is pushing for the new product to be launched within this financial year, subject to operational readiness at pension fund houses. "The pension funds have shown great interest," he said, adding that the regulator wants the structured payout to receive the same tax treatment as annuity purchases.

 

Internal modelling suggests that structured payouts, backed by prudent asset allocation and partial equity exposure for the early post-retirement years, could potentially deliver returns of 9.0–9.5%, outpacing annuity rates of 7.2–7.5%, Ramann said. This aligns with the long-term growth record of the composite National Pension System scheme, which has averaged returns of around 9.2%, he said.

 

In line with global pension trends, the regulator is also preparing to allow pension funds to invest in gold and silver exchange-traded funds, further diversifying the retirement portfolios. These commodities will be part of the existing 5% limit on alternate investments, which already includes real estate investment trusts, infrastructure investment trusts, alternate investment funds, and mortgage-backed securities. "This financial year, gold and silver will be permitted...within the 5% bracket," the chairman said.  End

 

Reported by Kabir Sharma

Edited by Ashish Shirke

 

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