The National Pension System (NPS) is India’s long‑term retirement savings plan. Traditionally, NPS offered Common Schemes with limited choices. Recently, the Pension Fund Regulatory and Development Authority (PFRDA) introduced the Multiple Scheme Framework (MSF) — giving subscribers greater flexibility and options to tailor their retirement portfolios.

1. What Are Common NPS Schemes?

Common Schemes are the original, standard investment options in NPS, available to all subscribers. Under these:

• You can choose one scheme per tier (Tier‑I for retirement savings, Tier‑II for voluntary savings).
• Investment options include pre‑defined allocations across equity (E), corporate bonds (C), and government securities (G).
• You can invest via two choices:
  • Active Choice: You decide the percentage of equity, debt, etc.
  • Auto Choice: Life‑cycle based auto allocation that reduces equity exposure as you age.
• Equity exposure is capped at 75% and reduces as you approach retirement age.

Best for: Investors who want simple, straightforward retirement planning without frequent decisions.

2. What Is the Multiple Scheme Framework (MSF)?

MSF is the new flexible structure introduced by PFRDA from October 1, 2025 for non‑government sector NPS subscribers. Under MSF:

• You can hold multiple schemes under a single PRAN, allowing a more diversified retirement portfolio.
• Pension fund managers (PFMs) design different schemes suited for categories such as self‑employed professionals, corporate employees, gig workers, etc.
• Each scheme may have moderate, high‑risk, and even low‑risk variants — tailored to subscribers’ risk tolerance and goals.
• High‑risk variants can have equity exposure up to 100%, higher than the common scheme’s limit.
• There’s a minimum vesting period of 15 years for MSF investments (you can exit or switch after meeting this).

Best for: Investors who want flexibility, customised risk strategies, and higher growth potential in their retirement corpus.

3. Key Differences: Common Schemes vs MSF

Feature

Common Schemes

MSF (Multiple Scheme Framework)

Flexibility

Single scheme per tier

Multiple schemes under one PRAN

Equity Exposure

Max ~75% (reduces with age)

Up to 100% in high‑risk variants

Target Audience

All subscribers

Non‑government subscribers (private sector, self‑employed, etc.)

Choice Customisation

Limited

Wide variety of schemes and risk variants

Vesting/Lock‑in

Until age 60/retirement

Minimum 15 years before exit

Switching Rules

Allowed once per year; within allocation

Can switch to common schemes anytime, but between MSF schemes only after 15 years

Charges

Very low (0.03–0.09% AUM approx.)

Slightly higher (capped at 0.30% AUM)

Exit Flexibility

Standard NPS rules

Can exit after 15 years or on retirement

📌 Note: MSF does not replace common schemes — it sits alongside them. You can choose either structure based on your needs.

4. Benefits of Each Option

Benefits of Common Schemes

✔ Simplicity — easy to understand and manage.
✔ Lower fees — usually lower expense ratios than MSF.
✔ Life‑cycle auto allocation — reduces equity exposure automatically with age.
✔ Ideal for investors seeking a passive retirement route without frequent decision‑making.

Benefits of MSF

✔ Greater choice — schemes tailored to risk, goals, and investor profiles.
✔ Higher return potential — up to 100 % equity exposure for long‑term growth.
✔ Multiple schemes — diversification across strategies under one PRAN.
✔ Early exit option — vest after 15 years rather than waiting until age 60.
✔ Personalised control — choose schemes based on risk appetite and time horizon.

5. Which Option Should You Choose?

Choose Common Schemes If You:

✔ Prefer simplicity and low maintenance.
✔ Are risk‑averse or nearing retirement.
✔ Want automatic allocations (Auto Choice).
✔ Don’t want frequent rebalancing.

Choose MSF If You:

✔ Are young with a long investment horizon (15 + years).
✔ Want higher equity exposure and diversify strategies.
✔ Are comfortable with higher volatility for greater long‑term returns.
✔ Want to build a tailored retirement portfolio based on needs and risk.

6. Final Takeaway

Both Common Schemes and the Multiple Scheme Framework (MSF) play important roles in NPS:

• Common schemes are simple and cost‑effective, ideal for mainstream retirement planning.
• MSF offers greater flexibility, personalised choices, and higher growth potential, especially suited to investors with longer horizons and a higher risk appetite.

Your choice should depend on how much control you want, your risk tolerance, and how long you plan to stay invested.

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.