Can You Invest 100 percentage in Equity under NPS? A Simple Guide for 2025
“From Oct 1, 2025, non-govt NPS gets multiple schemes and up to 100 percentage equity option under MSF – more choice, more risk, new flexibility.”
In September 2025, India’s pension regulator, the PFRDA, announced a Multiple Scheme Framework (MSF) for the National Pension System (NPS). This new framework applies to people in the private sector or self‑employed.
From 1 October 2025, you can have more than one NPS scheme under one PRAN and choose a high‑risk scheme that invests up to 100% in equities. Previously, you could invest only up to 75% in shares.
Important Points of the New Rules
|
Point |
Explanation |
|
Who can use it? |
People who are not government employees. Both new and existing NPS users in Tier‑1 or Tier‑2 accounts are included. |
|
Scheme types |
Each pension fund scheme under the new framework will have variants based on risk profile, including a high-risk variant that allows up to 100% equity investment. |
|
Lock‑in period |
A 15‑year vesting period is required before switching between MSF schemes. You can exit at age 60, at retirement or after 15 years (whichever is earlier), withdrawing up to 60 % of the corpus tax‑free. |
|
Switching |
If you want to switch before 15 years, you can only move to the older common schemes. After 15 years, you can switch freely between the new schemes. |
|
Fees |
Pension fund managers can charge a management fee of up to 0.30%, higher than before. This is still lower than typical mutual fund fees. |
What Does 100% Equity Mean?
Better Growth Potential
Stocks, or equities, can grow faster than bonds or fixed‑income investments over a long period. As per the data from the NPS Trust, pension funds managed by HDFC, ICICI and UTI earned over 12% per year on average over 5 and 10 years. Bond funds returned around 7.5%–9% while government bond funds earned around 9%.
Putting all your NPS money in equity means you could benefit from these higher returns. For instance, investing ₹5,000 each month from age 25 to 60 at a 10% yearly return may grow to over ₹1.9 crore.
Higher Ups And Downs
Shares don’t always go up. They can rise quickly but can also drop sharply when markets fall. A 100 % equity plan means your pension savings will change with stock market movements. You need to be comfortable with this volatility and be ready to stay invested for many years. If you are nearing retirement, a mix of shares and bonds might suit you better because it reduces sudden losses.
Lock‑in And Liquidity
The new high‑risk scheme locks your money in for 15 years. You can’t switch out of it during this period unless you move back to the old common schemes. You may withdraw up to 60% of your money without tax only after age 60 or after 15 years. This means you should not rely on your NPS savings for emergencies.
Changes to Withdrawals
When you finally exit the scheme, you must use 40% of your savings to buy an annuity (a pension plan). Under the MSF, you can leave after 15 years or at age 60 and still get 60% of your money tax‑free. That’s more flexible than the old rule, where leaving early meant you had to annuitise 80% of your savings.
Is 100 % Equity Right for You?
Who Might Benefit
- Young workers in their 20s or early 30s who can invest for decades. They have time to recover from market falls and may benefit from higher growth.
- Self‑employed and gig‑workers, especially those without employer pensions. They can use the 100% equity NPS scheme to build a significant retirement corpus.
- Investors with other safe assets: If you already own fixed deposits, PF or government schemes, putting your NPS money in equities can balance your overall mix.
Who Should be Cautious
- Near‑retirees: If you are 50+, a sudden market drop could reduce your savings before you retire. A mix of equities and bonds is safer.
- Risk‑averse investors: If market ups and downs worry you, consider the moderate risk scheme, which invests in both shares and bonds.
- Anyone without an emergency fund: Since NPS Tier 1 funds have strict withdrawal restrictions until retirement age, ensure you have separate, easily accessible savings for emergencies.
5 Practical Steps to Decide Your NPS Allocation
- Know your risk level and time frame. If you don’t like big swings in value, choose moderate risk.
- Check fund performance. Look at long‑term results. HDFC, ICICI and UTI have delivered strong equity returns as of September 2025.
- Diversify. Keep some money in safer investments outside NPS. Don’t rely on equities alone.
- Remember the rules. Switching from the high‑risk scheme is locked for 15 years, and the fees are higher.
- Stay updated. Pension rules can change, so keep an eye on PFRDA announcements.
Final Thoughts
The PFRDA’s new Multiple Scheme Framework ushers in greater flexibility for NPS subscribers. The ability to invest 100% in equity, along with tailored schemes and a reduced lock‑in, makes NPS more attractive for growth‑oriented investors.
However, full equity exposure carries a higher risk and a long vesting period. Evaluate your financial goals, risk appetite and liquidity needs carefully. A balanced strategy, such as combining the high‑risk scheme with moderate or low‑risk assets, can help you maximise growth while safeguarding your retirement portfolio.
Disclaimer: The information provided on the Website does not constitute investment advice, financial advice, trading advice, or any other form of advice, and you should not interpret any of the financial content as such. Please conduct your own due diligence and consult with a financial advisor before making any investment decisions. Midday does not endorse or promote any such activities, and you access them at your own risk, fully understanding the monetary and legal consequences involved. Midday shall not be held responsible for any losses you may incur as a result of using any such apps or websites.