PPFAS AMC gets PFRDA nod to manage NPS funds, expands into retirement segment

PPFAS Asset Management Pvt. Ltd. has received approval from the Pension Fund Regulatory and Development Authority (PFRDA) to act as a sponsor for a pension fund under the National Pension System (NPS), marking its formal entry into India’s fast-growing retirement savings space.

With this approval, the fund house will soon begin managing retirement assets of NPS subscribers. The company plans to set up a dedicated pension fund entity, which will be responsible for launching schemes, managing investments, and delivering long-term returns aligned with retirement goals.

Commenting on the development, Neil Parag Parikh, Chairman and CEO of PPFAS Asset Management, said, “We are honoured to receive this approval from PFRDA. Managing retirement savings is a significant responsibility, and we are committed to handling it with care, discipline, and a long-term approach. Our focus will remain on safeguarding investors’ interests while delivering consistent performance.”

The company will now complete regulatory and operational formalities before commencing full-scale pension fund operations.

Strategic expansion

The move signals a strategic expansion for PPFAS AMC, which has traditionally been known for its value-oriented equity investing approach. Entry into the NPS ecosystem allows the firm to tap into long-duration, stable capital flows, while also strengthening its positioning in India’s evolving retirement planning landscape.

India’s NPS has seen steady growth in recent years, driven by increasing awareness around retirement planning, tax incentives, and the shift towards market-linked pension products. With rising life expectancy and limited social security coverage, the role of professional pension fund managers is becoming increasingly critical.

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Investment Management Fee

PFRDA has revised the Investment Management Fee (IMF) under the NPS, effective April 1, 2026, for five years. The new structure, based on recommendations by a committee led by former SEBI chief U.K. Sinha, continues a slab-based fee model with differentiated rates for government and non-government subscribers.

There is no change in fees for government sector subscribers. The revised framework also retains existing annual charges for pension funds. Additionally, corporates under NPS will now be reclassified as Government Entities or Legal Entities, improving clarity and alignment with regulatory structures.

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Under the revised slabs, fees decline as assets under management (AUM) increase, benefiting long-term investors through lower costs at scale. For non-government subscribers, IMF starts at 0.12% and reduces to 0.04% at higher AUM levels, while government subscribers enjoy slightly lower rates across slabs. The move reinforces cost efficiency, transparency, and scalability within the NPS framework, while ensuring pension funds remain viable and competitive in managing growing retirement assets.

Why NPS remains attractive

The National Pension System continues to be one of the most tax-efficient retirement instruments available. Under current rules, subscribers can withdraw up to 60% of the accumulated corpus tax-free at retirement. The remaining 40% must be used to purchase an annuity, with the income taxed as per the individual’s income slab.

According to PFRDA Chairperson Sivasubramanian Ramann, the effective tax burden on NPS remains competitive. He noted that even for individuals in the highest tax bracket of 30%, the effective tax works out to around 12%, calculated as 40% of the corpus being taxed at 30%. This is broadly comparable to the 12.5% long-term capital gains tax on equity mutual funds.

Ramann said that the effective tax on NPS is broadly aligned with capital gains taxation and stressed that investment decisions should not be driven solely by tax arbitrage.

Recent rule changes also allow subscribers to withdraw up to 80% of the corpus, although only 60% remains tax-free. The final tax impact depends on withdrawal structure, annuity income, and the investor’s tax slab. Notably, under the new tax regime, individuals with annual income below ₹12 lakh may effectively pay no tax even on annuity income.