NPS charge structure updated: What changes for pension subscribers from July 2026

The Pension Fund Regulatory and Development Authority (PFRDA) has issued fresh clarifications on how charges will be applied under the National Pension System (NPS), introducing a more structured and transparent fee framework for subscribers. The revised norms, announced through a circular dated April 29, will come into effect from July 1, 2026.

The changes primarily focus on annual maintenance charges (AMC), dormant account fees, and PRAN-related costs, with the regulator aiming to bring uniformity across Central Recordkeeping Agencies (CRAs).

AMC alignment

A key update relates to Tier II accounts. PFRDA has clarified that AMC for Tier II accounts will now be aligned with Tier I accounts within the same sector—government or private.

At the same time, the regulator has provided relief for small investors. No AMC will be charged on Tier II accounts with a balance of up to ₹1,000 at the end of a quarter, ensuring that low-value accounts are not disproportionately impacted by maintenance costs.

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Separate AMC

In another important clarification, PFRDA stated that each pension scheme linked to a Permanent Retirement Account Number (PRAN) will be treated as a separate account for charging purposes.

This means that even if a subscriber holds multiple schemes under a single PRAN, AMC will be levied individually on each scheme. While this improves transparency in fee allocation, it could result in higher cumulative charges for investors with diversified holdings across multiple schemes.

Dormant accounts

The regulator has also introduced a concessional framework for inactive accounts. If no contributions are made for four consecutive quarters, the account will be classified as dormant.

In such cases, only 10% of the applicable AMC will be charged, significantly reducing the cost burden on inactive subscribers. Once a fresh contribution is made, the account will be reactivated in the following quarter and standard charges will resume.

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PRAN charges

The circular also clarifies the treatment of PRAN-related charges. The PRAN opening fee will be levied only once, at the time of initial account creation.

Importantly, no charges will be applied for opening or activating additional Tier I or Tier II accounts under an existing PRAN, removing ambiguity and making it easier for subscribers to manage multiple accounts.

APY and NPS-Lite accounts

PFRDA has extended further relief to low-income segments. Accounts with zero balance under Atal Pension Yojana (APY) and NPS-Lite schemes will not attract any AMC, ensuring that inactive or small accounts do not accumulate charges over time.

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Collection mechanism

All applicable charges will be collected at the end of each quarter, either through employer billing, where applicable, or by direct deduction from subscriber accounts.

The regulator has also clarified that all other provisions from its earlier circular dated September 15, 2025, will remain unchanged, ensuring continuity in the broader regulatory framework.

What it means for subscribers

The revised charge structure enhances transparency, predictability, and fairness in how NPS-related fees are applied. While small investors and dormant account holders benefit from reduced charges, those maintaining multiple schemes under a single PRAN may need to review their portfolio structure to manage costs effectively.

Overall, the changes mark a step toward a more streamlined and investor-friendly pension system, with clearer rules on how and when charges are levied.

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