National Pension System gets major upgrade: Expert on why NPS deserves a place in your portfolio
Financial expert Dhirendra Kumar has called the 2025 NPS revamp a “turning point in India’s retirement planning.” He said, “At its heart, this reform is about trusting investor choice — giving savers freedom to design, diversify, and take control of their long-term financial security.”
- Oct 25, 2025,
- Updated Oct 25, 2025 3:22 PM IST
The National Pension System (NPS), India’s flagship retirement savings plan, has undergone its biggest transformation yet in 2025. Regulated by the Pension Fund Regulatory and Development Authority (PFRDA), the revamped NPS now combines greater flexibility, digital simplicity, and smarter investment options — giving savers across India more control over their financial future.
Financial expert Dhirendra Kumar, who recently interviewed the PFRDA chairperson, calls it a “revolutionary upgrade” that trusts investors to take charge of their own retirement. “NPS now gives complete freedom to design your own pension portfolio, while keeping the focus on long-term discipline,” he said.
Multiple schemes, more freedom
The biggest reform is the new multi-scheme framework, which allows investors to design their own pension mix across multiple funds while retaining NPS’s core long-term focus. Earlier, investors could only allocate up to 75% to equity in a single scheme. Now, they can diversify across four or more funds — choosing allocations in equity, corporate bonds, and government securities as per their goals and risk tolerance.
This change brings NPS on par with advanced global retirement systems — offering the freedom of a mutual fund, the discipline of a pension, and the security of regulation.
Regular contributions reduce risk
NPS works like a built-in long-term SIP (Systematic Investment Plan). It aligns savings with income — encouraging steady, monthly contributions that reduce market-timing risks. Instead of one-time lump-sum bets, investors commit to small, consistent investments over decades, compounding wealth efficiently and steadily.
Flexibility with guardrails
While NPS gives investors freedom of choice, it also maintains guardrails to ensure responsible investing. Investors can choose between Auto Choice (where allocation adjusts with age) and Active Choice (self-managed). Automated nudges guide investors to rebalance portfolios as they age — helping them stay consistent while avoiding reckless risk-taking.
“The new structure gives freedom with responsibility,” says Kumar. “It’s about trusting the investor — but also protecting long-term goals.”
Withdrawals are evolving
The withdrawal process — long seen as NPS’s weak link — is also being redesigned. New proposals include deferred annuities, systematic lump-sum withdrawals, and customized retirement income plans, allowing investors to personalise post-retirement cash flows.
Retirees may soon be allowed to delay annuity purchases until age 75 or draw from their corpus gradually — giving them better control over how and when they access their savings.
Discipline drives wealth creation
The underlying philosophy of NPS remains unchanged: discipline creates wealth. Its structure encourages regular contributions, long-term compounding, and goal-based investing. The 2025 update enhances this by adding automation and smart digital tools — making it easier for users to stay invested, monitor performance, and adjust their plans.
Why choose NPS?
Kumar said NPS promotes long-term wealth creation through disciplined investing, where small monthly contributions compound significantly over decades—for example, a 25-year-old investing Rs 5,000/month could accumulate over Rs 3 crore by 60 at 10% returns. It offers flexibility to choose an asset mix between equity, corporate bonds, and government securities, allowing higher equity exposure when young and a gradual shift to debt for stability.
NPS is tax-efficient, providing deductions under Sections 80C, 80CCD(1B), and employer contributions under 80CCD(2). With low costs, transparent online tracking, and the ability to withdraw 60% tax-free at 60 while annuitizing the rest, it ensures lifelong pension security.
The bottom line
The upgraded NPS 2025 blends freedom with discipline, offering investors the best of both worlds — flexibility to design their own retirement plan and a structure that ensures financial stability.
Whether you’re a young professional, a gig worker, or a government employee, the National Pension System is no longer just a pension product — it’s a comprehensive wealth-building platform that grows with you, safeguards your future, and helps you retire with dignity.
The National Pension System (NPS), India’s flagship retirement savings plan, has undergone its biggest transformation yet in 2025. Regulated by the Pension Fund Regulatory and Development Authority (PFRDA), the revamped NPS now combines greater flexibility, digital simplicity, and smarter investment options — giving savers across India more control over their financial future.
Financial expert Dhirendra Kumar, who recently interviewed the PFRDA chairperson, calls it a “revolutionary upgrade” that trusts investors to take charge of their own retirement. “NPS now gives complete freedom to design your own pension portfolio, while keeping the focus on long-term discipline,” he said.
Multiple schemes, more freedom
The biggest reform is the new multi-scheme framework, which allows investors to design their own pension mix across multiple funds while retaining NPS’s core long-term focus. Earlier, investors could only allocate up to 75% to equity in a single scheme. Now, they can diversify across four or more funds — choosing allocations in equity, corporate bonds, and government securities as per their goals and risk tolerance.
This change brings NPS on par with advanced global retirement systems — offering the freedom of a mutual fund, the discipline of a pension, and the security of regulation.
Regular contributions reduce risk
NPS works like a built-in long-term SIP (Systematic Investment Plan). It aligns savings with income — encouraging steady, monthly contributions that reduce market-timing risks. Instead of one-time lump-sum bets, investors commit to small, consistent investments over decades, compounding wealth efficiently and steadily.
Flexibility with guardrails
While NPS gives investors freedom of choice, it also maintains guardrails to ensure responsible investing. Investors can choose between Auto Choice (where allocation adjusts with age) and Active Choice (self-managed). Automated nudges guide investors to rebalance portfolios as they age — helping them stay consistent while avoiding reckless risk-taking.
“The new structure gives freedom with responsibility,” says Kumar. “It’s about trusting the investor — but also protecting long-term goals.”
Withdrawals are evolving
The withdrawal process — long seen as NPS’s weak link — is also being redesigned. New proposals include deferred annuities, systematic lump-sum withdrawals, and customized retirement income plans, allowing investors to personalise post-retirement cash flows.
Retirees may soon be allowed to delay annuity purchases until age 75 or draw from their corpus gradually — giving them better control over how and when they access their savings.
Discipline drives wealth creation
The underlying philosophy of NPS remains unchanged: discipline creates wealth. Its structure encourages regular contributions, long-term compounding, and goal-based investing. The 2025 update enhances this by adding automation and smart digital tools — making it easier for users to stay invested, monitor performance, and adjust their plans.
Why choose NPS?
Kumar said NPS promotes long-term wealth creation through disciplined investing, where small monthly contributions compound significantly over decades—for example, a 25-year-old investing Rs 5,000/month could accumulate over Rs 3 crore by 60 at 10% returns. It offers flexibility to choose an asset mix between equity, corporate bonds, and government securities, allowing higher equity exposure when young and a gradual shift to debt for stability.
NPS is tax-efficient, providing deductions under Sections 80C, 80CCD(1B), and employer contributions under 80CCD(2). With low costs, transparent online tracking, and the ability to withdraw 60% tax-free at 60 while annuitizing the rest, it ensures lifelong pension security.
The bottom line
The upgraded NPS 2025 blends freedom with discipline, offering investors the best of both worlds — flexibility to design their own retirement plan and a structure that ensures financial stability.
Whether you’re a young professional, a gig worker, or a government employee, the National Pension System is no longer just a pension product — it’s a comprehensive wealth-building platform that grows with you, safeguards your future, and helps you retire with dignity.