NPS investment in startups: AINPSEF writes to PM Modi seeking probe and asks for dissolution of NPS Trust

Manjeet Singh Patel, president of All India New Pension Scheme Employees’ Federation (AINPSEF), a central government employee body, in a letter to Prime Minister Narendra Modi today (Wednesday, October 14, 2026) has alleged National Pension System (NPS) Trust of serious financial irregularities, financial negligence, extending undue benefits to private entities and working against the interests of employees.

Patel has sought a high-level Comptroller and Auditor General of India (CAG) audit of NPS Trust, and fixing accountability in the conflict of interest case between the NPS Trust and the Pension Fund Regulatory and Development Authority (PFRDA).

In his letter, Patel also wrote that the NPS corpus of many employees has turned negative in the last one year because of the poor performance of the share market and hence, the government should ensure a minimum return of 8.25% on the lines of the Employees’ Provident Fund Organisation (EPFO).



Here’s what Patel writes in his letter to PM in the letter-

Startup funding issue

Patel says that on NPS Day (October 1, 2026), PFRDA and NPS Trust committed to invest approximately Rs 17,000 crore in Alternative Investment Funds (AIF/private equity/venture capital) and start-ups (like Alteria Capital, Trifecta Capital) without subscriber consent or guarantee.

On that day, the NPS Trust also presented a symbolic check of Rs 400 crore to Trifecta and Anteria, writes Patel.

"The intentions of the Trust are also questioned because till date it has not guaranteed any returns to the employees on such a huge amount, then how can it commit to giving Rs 17000 crore to such a big high-risk startup?," reads the letter.

Serious negligence in fund management of ₹800 crore

Patel writes that Rs 800 crore deposited by the Ministry of Finance in the UPS pool corpus on July 8, 2026, remained uninvested as of July 16, due to the laxity and negligence of the NPS Trust.

“This inaction has resulted in a direct financial loss of over Rs 2 crore in the form of interest to the NPS pool corpus. Who will compensate for this?,” writes Patel.

Planning of Rs 17000 crore investment in high-risk Alternative Investment Funds (AIFs) and infrastructure

Conflict of interest of NPS Trust

Patel alleges NPS Trust chairperson Dinesh Kumar Khara of involving in conflict of interest, saying he is an independent director on the board of CRISIL and the chairman of K-Fintech, the Central Recordkeeping Agency (CRA).

"This means that the same person setting benchmarks is also overseeing funds worth crores and handling subscriber transactions, a clear violation of the conflict of interest rule," reads the letter.

Fees of around Rs 2,500 crore per year, yet consistently negative returns

Patel says every year, approximately Rs 50 crore is paid from employees' pension funds to NPS Trust, approximately Rs 2,000 crore to pension fund managers (PFMs), and approximately Rs 250 crore to CRAs.

Patel alleges that fund managers are being paid exorbitant fees without any accountability, at the risk of employees, which is completely irresponsible and illegal.

"Returns on equity schemes have consistently been negative, and returns on corporate debt and government securities have been significantly lower than the EPFO's minimum interest rate of 8.25% or even bank FDs," writes Patel.

Failure to implement Minimum Assured Return Scheme

Patel writes that NPS Trust has failed to implement any of the key essential mechanisms such as Minimum Assured Return Scheme (MARS) suggested by the CAG in the NPS report in the year 2020. He writes that the high-level task committee for MARS, formed by the PFRDA in January 2026, also remains undisclosed.

Failure in implementing Unified Pension Scheme (UPS)

NPS Trusts and nodal offices have been returning files of UPS pension holders without reason, citing minor deficiencies (such as PIN codes, email addresses, etc.), causing significant mental and financial distress to employees. Consequently, hundreds of retired employees have not been able to receive their pensions to date.

What AINPSEF wants PM Modi to do

In its list of suggestions to the PM, the AINPSEF has raised six demands-

1.Immediate high-level investigation and CAG audit

In the letter, the AINPSEF has the appointment of private consultants by NPS Trust and AIF investments should be investigated and audited impartially by the CAG.

2.Dissolution of NPS Trust

The employee association demands that the NPS Trust be dissolved with immediate effect, and the responsibility for complete monitoring and management of the pension fund should be handed over to the CAG or any statutory public body.

3. It has demanded immediate compensation for the loss to the UPS Pool corpus due to the delay in investing Rs 800 crore from the Trust.

4. Guaranteed minimum returns

Patel writes that a minimum return of 8.25% should be guaranteed on employee contributions, on the lines of EPFO.

5. Flexible Option to Employees

AINSPEF has demanded that employees should be given the flexible option to choose either NPS or UPS during their service period.

6. Prevention of conflict of interest

Patel says that the conflict of interest between private entities and individuals holding similar positions in PFRDA and NPS Trust should be immediately eliminated, and accountability of all officials should be fixed.