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Banking & RBI

PFRDA and the National Pension System

The pension regulator PFRDA and the schemes it oversees (NPS, Atal Pension Yojana, UPS), a staple of financial-awareness sections.

Pareto Academy · updated 26 October 2026

At a glance

The Pension Fund Regulatory and Development Authority (PFRDA) regulates and develops India's pension sector. Its main product is the National Pension System (NPS), a market-linked, defined-contribution retirement scheme. It also administers the Atal Pension Yojana (APY) for the unorganised sector and the Unified Pension Scheme (UPS) option for central government employees.

Key facts

  • Set up: 2003, by a government resolution
  • Statutory status: PFRDA Act, 2013 (in force from 1 February 2014)
  • Headquarters: New Delhi
  • Ministry: Department of Financial Services, Ministry of Finance
  • Chairperson: Sivasubramanian Ramann (took charge in June 2025; former CMD of SIDBI)
  • NPS start: mandatory for central government employees joining on or after 1 January 2004 (armed forces excluded); opened to all citizens in 2009
  • Pension fund managers: 10 (SBI, LIC, UTI, HDFC, ICICI Prudential, Kotak Mahindra, Aditya Birla Sun Life, Tata, Axis, DSP); Bank of Baroda's pension fund is the newest sponsor
  • Atal Pension Yojana: guaranteed pension of ₹1,000–₹5,000 a month from age 60; joining age 18–40; income-tax payers barred from joining since 1 October 2022
  • Unified Pension Scheme: an option within NPS for central government employees, effective 1 April 2025
  • NPS Diwas: 1 October

How it works

NPS accounts.

Account Nature
Tier I Retirement account; withdrawals restricted; tax benefits
Tier II Voluntary savings account; money can be withdrawn freely; needs an active Tier I

The subscriber's contributions are invested by a chosen pension fund manager across equity, corporate bonds and government securities. A Central Recordkeeping Agency keeps the accounts, and a trustee bank handles the money. On exit, part of the corpus can be taken as a lump sum and the rest buys an annuity (a monthly pension) from an insurer. Under amendments notified in December 2025, non-government subscribers may take up to 80% as a lump sum, and very small corpuses can be withdrawn in full.

Atal Pension Yojana. Launched in 2015 for unorganised-sector workers, APY gives a fixed monthly pension of ₹1,000 to ₹5,000 depending on the amount and age at which a person starts contributing. It runs through banks and post offices where the person has a savings account.

Unified Pension Scheme. Approved by the Cabinet on 24 August 2024, UPS gives central government employees an assured payout of 50% of the average basic pay of the last 12 months, after at least 25 years of service, with a minimum of ₹10,000 a month after 10 years. Once chosen, it cannot be reversed.

Pension fund sponsors. Banks and other financial firms are appointed by PFRDA as sponsors and set up pension fund companies under Section 27 of the PFRDA Act.

Timeline

  • 2003: PFRDA set up by resolution
  • 2004: NPS starts for new central government employees
  • 2008: SBI becomes the first public sector bank to sponsor a pension fund
  • 2009: NPS opened to all citizens
  • 2013: PFRDA Act passed
  • 2015: Atal Pension Yojana launched
  • 2025: UPS takes effect (1 April); NPS exit rules relaxed (December)

Recent developments

  • 1 Oct 2026: At NPS Diwas, PFRDA appointed Bank of Baroda as sponsor of a pension fund under Section 27 of the PFRDA Act. Its subsidiary, BoB Pension Fund Management Company Ltd, is 80.10% owned by the bank and 19.90% by Baroda BNP Paribas AMC. It is the second public sector bank in the business, after SBI (2008).

Exam traps

  • PFRDA regulates NPS and APY, but EPF is run by the EPFO under the Ministry of Labour, not by PFRDA.
  • PFRDA was set up in 2003 but became statutory only in 2013.
  • PFRDA's HQ is New Delhi; IRDAI's is Hyderabad; SEBI's is Mumbai.
  • Under NPS the pension depends on market returns (defined contribution); under APY and UPS the payout is assured.
  • Income-tax payers cannot join APY after 1 October 2022.

Quick check

  • Q: Under which Act was PFRDA made statutory? A: The PFRDA Act, 2013.
  • Q: What monthly pension range does Atal Pension Yojana guarantee? A: ₹1,000 to ₹5,000.
  • Q: Which was the first public sector bank to sponsor a pension fund? A: SBI, in 2008.

Further reading

Sources

In the news

Every time this topic has appeared in our current affairs, newest first:

  1. Week of 1–7 October 2026Bank of Baroda becomes the second public sector bank to sponsor a pension fund