PFRDA
The Pension Fund Regulatory and Development Authority — interim NPS regulator from 2003 and statutory authority for the pension sector since 1 February 2014 under the PFRDA Act, 2013.
In plain language
India's financial sector has a regulator for each major segment: the RBI for banks, SEBI for securities and commodity derivatives markets, IRDAI for insurance — and the PFRDA for pensions.
The PFRDA regulates the National Pension System and any other pension scheme not regulated by another enactment. It decides who may act as an intermediary in the NPS, registers and supervises them, approves schemes and investment guidelines, keeps the costs down, and gives subscribers somewhere to take a grievance.
It does not run the money itself. That is the job of the pension funds, the NPS Trust, the custodian and the other intermediaries it regulates.
How it works
History. Established in 2003 as an interim regulator for the NPS; with the PFRDA Act, 2013, notified on 1 February 2014, it became the statutory authority for regulating and developing the pension sector.
Statutory objects. To promote old age income security by establishing, developing and regulating pension funds, and to protect the interests of subscribers.
Constitution. A body corporate with a chairperson, three whole-time members and three part-time members, appointed by the Central Government for 5 years, eligible for re-appointment. It is subject to the Central Government's directions on policy and reports periodically to it. Its regulations are framed and reviewed under the PFRDA (Mechanism for Making and Review of Regulations) Regulations, 2024, through an internal Review Committee and a Regulation Advisory Committee.
Functions the workbook lists:
- Regulating the NPS and other pension schemes under the Act
- Approving schemes, investment guidelines and management norms
- Registering and regulating intermediaries
- Protecting subscribers — safety of contributions, reasonable and economical costs
- Establishing a grievance redressal mechanism, now delivered through the PFRDA Pension Sahayak portal
- Educating subscribers and the public, partly through the Subscriber Education and Protection Fund (SEPF)
- Adjudicating disputes among intermediaries; standardising performance information
- Restraining persons, investigating, and reporting to the Central Government if a pension fund or the CRA acts prejudicially — after which the government may appoint an administrator
It also has search and seizure powers and may impose penalties.
Its place in the NPS. The PFRDA is the settlor of the NPS Trust, which holds subscribers' assets for their benefit and monitors the other intermediaries.
A worked example
Costs are a regulatory decision, and they add up (illustrative corpus). A non-government subscriber has a Tier I corpus of Rs 25 lakh. The charges below are the schedule the workbook gives under the PFRDA framework for 2026:
| Charge | Rate | On Rs 25,00,000 |
|---|---|---|
| PoP, AUM-based (from 1 January 2026) | 0.20% p.a. | Rs 5,000 |
| Pension fund Investment Management Fee, highest non-government slab | 0.12% p.a. | Rs 3,000 |
| NPS Trust | 0.003% p.a. | Rs 75 |
| CRA annual maintenance, private sector | ₹0 to ₹500 by corpus slab | up to Rs 500 |
| Total | up to Rs 8,575 a year |
0.20% × 25,00,000 = 5,000
0.12% × 25,00,000 = 3,000
0.003% × 25,00,000 = 75
All figures are exclusive of GST. Note that the IMF slabs are set on the pension fund's total AUM (0.12 percent up to Rs 25,000 crore for non-government subscribers), not on the individual's corpus; 0.12 percent is used here as the highest rate. Under the Multiple Scheme Framework the PFRDA caps total charges at 0.30 percent of AUM — Rs 7,500 on the same corpus.
That single-digit-thousands figure on a Rs 25 lakh corpus is what the workbook means when it calls the NPS one of the lowest-cost pension schemes, and it is the "keeping costs reasonable and economical" function in rupees.
Why NISM asks about it
Chapter 9, section 9.2 (Role of Pension Fund Regulatory and Development Authority), is devoted to it — objects, constitution and functions — and section 9.1 places it among India's financial regulators. Chapter 4, sections 4.1 and 4.1.1, gives the 2003 / 2014 history and its role as NPS regulator and settlor of the NPS Trust. Expect recall of the dates, the board composition and tenure, and matching questions that pair each regulator with its sector.
Common exam traps
- 2003 interim, 2013 Act, 1 February 2014 notification. Three dates, frequently scrambled.
- Chairperson + 3 whole-time + 3 part-time members, 5-year tenure, appointed by the Central Government.
- The PFRDA regulates; it does not manage funds or hold assets. Pension funds manage, the trustee bank holds cash, the custodian holds securities, the NPS Trust holds assets for subscribers.
- The PFRDA is the settlor of the NPS Trust — not a trustee of it.
- EPFO schemes are outside it. Mandatory EPF and special provident funds continue under their own Acts.
- NPS is mandatory for new Central Government recruits except the armed forces, voluntary for everyone else.
- Grievance redressal is a PFRDA function, delivered through intermediaries, the NPS Trust and the Ombudsman — and now through Pension Sahayak.
Check yourself
1.Which of the following is NOT an eligibility criterion for appointment as the Trustee Bank under the PFRDA (Trustee Bank) Regulations, 2015?
- a)It should be a scheduled commercial bank, registered and regulated by the RBI, with an extensive rural and urban network of branches
- b)It should have made a net profit in the last three consecutive financial years and satisfy the minimum capital adequacy ratio specified by the RBI
- c)It should be authorised to undertake the business of the central and state governments, with all branches networked and a Cash Management Services business
- d)It should be registered with SEBI, and cross-holding in it by a pension fund, its sponsor or the CRA should be less than 50 percent
Show the answer
Answer: (d) It should be registered with SEBI, and cross-holding in it by a pension fund, its sponsor or the CRA should be less than 50 percent
Options A, B and C are all eligibility criteria listed in the PFRDA (Trustee Bank) Regulations, 2015:
- It should be a scheduled commercial bank, registered and regulated by the RBI with extensive rural and urban network of branches
- It should have made a net profit in the last three consecutive financial years and must satisfy the minimum capital adequacy ratio specified by the RBI
- It is authorized to undertake the business of the central and state governments, and all the branches should be networked and the bank should have Cash Management Services business
- There must also be a commitment of the applicant to establish technological compatibility with the central recordkeeping agency
Option D is borrowed from the custodian. That is the entity that must be registered with SEBI and in which cross-holding, if any, by a pension fund or its sponsors, trustee bank or central recordkeeping agency should be less than 50 percent. So option D is the answer.
Axis Bank Ltd. is currently the designated trustee bank, and it charges the subscriber nil.
2.Which of the following correctly describes the custodian for the pension schemes regulated by PFRDA?
- a)A SEBI-registered custodian appointed by PFRDA, in which cross-holding by a pension fund or its sponsors, the trustee bank or a CRA should be less than 50 percent; Deutsche Bank currently holds the role for a five-year term from 1 April 2022
- b)An RBI-regulated scheduled commercial bank appointed by the NPS Trust; Axis Bank currently holds the role
- c)Each pension fund appoints its own custodian, and the securities are held in the name of the pension fund
- d)The custodian holds the securities in its own name and is their beneficial owner until the subscriber exits
Show the answer
Answer: (a) A SEBI-registered custodian appointed by PFRDA, in which cross-holding by a pension fund or its sponsors, the trustee bank or a CRA should be less than 50 percent; Deutsche Bank currently holds the role for a five-year term from 1 April 2022
The workbook says a custodian provides custodial and depository participant services for the pension schemes regulated by PFRDA. It is a custodian registered with SEBI, appointed by PFRDA and whose cross-holding, if any, by a pension fund or its sponsors, trustee bank or central recordkeeping agency should be less than 50 percent. The custodian currently appointed by PFRDA is Deutsche Bank, engaged for a five-year term with effect from 1 April 2022; it holds the securities in the name of the NPS Trust and facilitates their delivery, settlement and corporate-action benefits. So option A is correct.
Why the others are wrong:
- Option B describes the trustee bank, Axis Bank, which handles the funds side. The custodian handles the securities side.
- Option C: the custodian is appointed by PFRDA, not by each pension fund, and the securities are held in the name of the NPS Trust.
- Option D: the custodian holds the securities in the name of the NPS Trust, and the beneficial owners of these assets are the individual NPS subscribers.
The custodian's charge is tiny: an asset-servicing charge of 0.000000001770 percent per annum of assets under custody.
3.Who defines the eligibility norms of the intermediaries in the NPS?
- a)Ministry of Finance
- b)SEBI
- c)PFRDA
- d)NPS Trust
Show the answer
Answer: (c) PFRDA
This is the workbook sample question. The PFRDA regulates NPS and the pension schemes not regulated by any other enactment, DEFINES THE ELIGIBILITY NORMS FOR INTERMEDIARIES, REGISTERS AND REGULATES THE INTERMEDIARIES, and establishes the mechanism for protecting the interests of the subscribers.
⚠️ The NPS Trust is the tempting wrong answer, because it genuinely does monitor and evaluate the functioning of all the intermediaries. But monitoring is not norm-setting — the Trust supervises against standards PFRDA writes.
SEBI appears in the architecture only because the custodian must be SEBI-registered; it does not set NPS intermediary norms. The Ministry of Finance notifies schemes such as the UPS but does not define intermediary eligibility.
Where this is taught
Free preparation for NISM Series SEBI-ICERelated terms
- Multiple Scheme FrameworkThe PFRDA framework, effective 1 October 2025, that lets non-government NPS subscribers hold branded pension-fund schemes alongside the existing Common Schemes under a single PRAN at each CRA.
- National Pension SystemA PFRDA-regulated, defined-contribution retirement scheme in which the subscriber builds a market-linked corpus and must convert part of it into an annuity at exit; there is no guaranteed return.
- Central Recordkeeping AgencyThe intermediary that holds every NPS subscriber record — it issues the PRAN, unitises contributions at scheme NAV and sits between the subscriber, the pension funds and the trustee bank.
- NPS TrustThe trust set up by PFRDA under the Indian Trusts Act that holds all NPS assets for subscribers' benefit and supervises the other intermediaries, run by a board of five to eleven trustees.
- PFRDA Pension SahayakPFRDA's AI-powered omnichannel grievance portal for NPS subscribers — web, app and WhatsApp, mobile-OTP login, 22 languages — replacing the CRA grievance system from June 2026.
- Point of PresenceThe NPS distribution layer — a registered intermediary that onboards subscribers, collects contributions and processes service and exit requests, needing Rs 2 crore of net worth and electronic connectivity to the CRA.
- NPS Trust escalationThe second tier of NPS grievance redress: if an intermediary has not resolved a subscriber complaint within 30 days, or resolved it unsatisfactorily, the subscriber registers it with the NPS Trust.
- Pension AgentA person a Point of Presence engages, with Board approval, to extend NPS distribution — who may take registrations, contributions and service requests but may not process exits or accept cash.
- Accumulated pension wealthThe official NPS term for the money value of the pension investments in a subscriber's Permanent Retirement Account — the figure that decides how much can be taken as a lump sum and how much must buy an annuity.
- Business DayThe PFRDA-defined day on which the Trustee Bank's designated branch, the stock exchanges and the government securities market are all simultaneously open for business.
- Retirement AdviserA PFRDA-registered individual or firm that advises subscribers on the NPS for a fee, acting in a fiduciary capacity and never collecting cash for contributions.
- Project OASIS ReportThe 2000 report of the S.A. Dave committee on old-age income security, which recommended moving India from unfunded defined-benefit pensions to funded individual accounts — the design the NPS was built on.
- Intermediary under the PFRDA ActThe PFRDA Act's defined class of regulated entities — pension funds, the CRA, the NPS Trust, advisers and points of presence — none of which may operate without a certificate of registration.
- PFRDA OmbudsmanThe appellate authority an NPS subscriber may approach when the NPS Trust has not resolved a grievance within 21 days, required to pass an award within 90 days of the appeal being filed.
- Overseas advisory feesThe dollar-denominated ceilings a retirement adviser may charge a prospect outside India — up to US$ 8 for on-boarding to a PoP in India, US$ 2 through an overseas PoP branch, and US$ 1 per later transaction.
- NPS SwasthyaA PFRDA initiative that pairs old-age income security with healthcare coverage in a single product, introduced because out-of-pocket medical spending is a major drain on retirement savings.