How much risk can you take? Pension regulator plans to ask before you choose a NPS scheme

Pension Fund Regulatory and Development Authority (PFRDA) plans to introduce a suitability platform for National Pension System (NPS) subscribers, seeking to assess their risk appetite before they choose a pension scheme,. Times of India reported

The platform will be integrated across NPS interfaces, including those operated by pension funds, Central Recordkeeping Agencies (CRAs) and the NPS Trust, PFRDA chairman S Ramann said.

“Suitability and risk appetite is something that we are focusing on. All the NPS screens, whether with a pension fund, on a CRA platform or the NPS Trust platform, will ask people the right questions. Their final choice of scheme is their choice, but our job is to determine their risk appetite in a better way,” TOI quoted Ramann as saying.


He said lifecycle products were one way to address suitability. NPS currently offers four lifecycle variants based on risk appetite, under which asset allocation changes automatically as subscribers age.

Ramann was speaking at the launch of the NPS Preference Index Study 2026 by HDFC Pension.

The study highlights the changing retirement landscape in India, with average life expectancy at 78 years and average family size falling to 4.4 members, Sriram Iyer, MD & CEO of HDFC Pension Fund Management, said, as per TOI. Pension coverage, however, remains low at 17-18%.

The share of respondents actively considering NPS for retirement increased to 59% from 53% in 2023, according to the study. Emergency savings have also gained importance as a savings priority, overtaking children's education among key drivers.

EPF ceiling and NPS

Ramann said a higher EPF ceiling would not necessarily reduce interest in NPS, as employees could continue investing beyond the EPF limit through other instruments.

“Most corporates are giving their employees the option to put money into NPS through salary deductions,” he said.

He also stressed the importance of diversification for long-term retirement investors, saying equity exposure could benefit those with an investment horizon of at least 15 years.

PFRDA has expanded the investment universe available to NPS subscribers to include real estate investment trusts (REITs), infrastructure investment trusts (InvITs) and alternative investment funds (AIFs).

The regulator's focus on suitability comes as it seeks to give NPS subscribers greater flexibility in choosing investment options while putting safeguards around how those choices are made.