NPS Charges Are Changing From October 1, 2026: Here Is Everything You Need to Know

August 28, 2026, was a busy day for PFRDA. The Pension Fund Regulatory and Development Authority issued multiple circulars simultaneously, two of which directly affect how the National Pension System works for millions of subscribers from October 1 onward.

The first is a revised charge structure for Points of Presence, the entities that onboard and service NPS subscribers. The second is a standardised framework for how NPS schemes are classified and presented to subscribers. Both are effective from October 1, 2026, and both matter depending on where you are in your NPS journey.

If you hold an NPS account, are thinking about opening one, or simply want to understand whether your pension savings are being managed in the most efficient structure, this blog gives you the complete picture.

What Is a Point of Presence and Why Do Its Charges Matter?

Before getting into what changed, it helps to understand what a Point of Presence, or PoP, actually is.

When you open an NPS account, you do so through an entity registered with PFRDA to facilitate that process. This could be your bank, a financial institution, or another PFRDA-registered body. That entity is the PoP. It handles your onboarding, processes your contributions, and services your account over time. In return, it earns fees that are charged to your account.

These fees come out of your corpus, not as a separate deduction you write a cheque for, but through small reductions in the value of your account. That is why the fee structure matters. Over decades of pension saving, even small annual percentage charges compound into meaningful amounts. Understanding what you pay and when you pay it helps you make more informed decisions about how to manage your NPS account.

The New PoP Charge Structure Effective October 1, 2026

PFRDA’s August 28 circular prescribes a revised and standardised charge structure covering all schemes under NPS and NPS Lite. This replaces the earlier March 2026 circular that had been in effect.

The Onboarding Charge: Rs 200

For every new Permanent Retirement Account Number, or PRAN, opened through a PoP, a one-time onboarding charge of Rs 200 is applicable. If the account is opened digitally, meaning through a non-face-to-face or online channel, the reduced charge of Rs 100 applies.

Here is something important about how that Rs 200 is actually collected: it is not taken from your account in a single hit. Instead, the Central Recordkeeping Agency recovers it in quarterly installments of Rs 50 per quarter by cancelling units. This means the deduction happens gradually over four quarters, softening the immediate impact on your account balance.

One clarification worth understanding: if your account was originally opened through a PoP but you now make contributions through e-NPS or any other online channel, you do not automatically escape PoP charges. The original onboarding route remains the determining factor for whether PoP charges apply to your account.

The Annual Charge: 0.20% of AUM

Beyond the one-time onboarding fee, an annual charge of 0.20% of your Assets Under Management applies. This fee is adjusted through NAV, meaning it is reflected in the daily valuation of your units rather than as a separate line-item deduction visible in your account. The amount is payable to PoPs on a quarterly basis.

To put this in concrete terms: if your NPS corpus is Rs 5 lakh, the annual PoP charge at 0.20% works out to Rs 1,000 per year. At Rs 20 lakh, it is Rs 4,000 per year. At Rs 50 lakh, it is Rs 10,000 per year. These are not enormous amounts in isolation, but they are real, and they compound over time.

Dormant Accounts Are Exempt

Here is a provision that directly protects subscribers with inactive accounts. Dormant accounts do not attract the annual PoP charge. An account is classified as dormant when, after a contribution in any quarter, there is no further contribution for four consecutive quarters. The determination is made at the end of each quarter using accounts linked to a unique PAN across all CRAs.

This is practically relevant for many NPS subscribers who may have opened accounts during their employment with a particular organisation and are no longer actively contributing. Those accounts will not accumulate the annual 0.20% charge during dormant periods.

Minimum Contribution Requirements

The circular also prescribes minimum contribution thresholds. At the time of onboarding, a minimum of Rs 250 is required as the initial contribution. For every subsequent contribution, the minimum is Rs 10. These are low thresholds designed to keep the system accessible, but they are worth knowing if you are setting up automated contributions.

The New Scheme Classification Framework

Alongside the charge revision, PFRDA issued a master circular on August 28, 2026, introducing a standardised framework for how NPS schemes are classified and presented to subscribers. This framework is explicitly applicable to non-government sector accounts. Government sector accounts are not covered by these new classification provisions.

NPS schemes are now categorised into five distinct types, each with a clear identity and purpose.

• Lifecycle-based Schemes are the auto-pilot option. The allocation among Equity, Corporate Bonds, and Government Securities shifts automatically as you age, following a predetermined matrix. As you get older, the equity exposure reduces, and the debt exposure increases, reflecting the conventional wisdom that you should take less risk as retirement approaches. These schemes suit investors who want a hands-off approach to asset allocation.
• Active Choice does the opposite. It puts you in control, allowing you to direct how your corpus is split across Equity, Corporate Bonds, and Government Securities up to prescribed limits. This suits investors who have a clear view of their own risk appetite and want to make deliberate allocation decisions rather than relying on an age-based formula.
• NPS Sanchay is the newest addition, introduced in May 2026 specifically for the informal sector. It is a simplified variant of NPS under the All Citizen Model, with its pre-defined investment pattern aligned to the Government Sector NPS framework. This makes it a relatively conservative and stable option, suitable for self-employed individuals, gig workers, freelancers, and small business owners who want the structure of a government-style pension without the complexity of active investment management.
• Multiple Scheme Framework, or MSF, is a more advanced structure. Schemes under MSF are classified strictly by their equity allocation mandate into five categories: A, B, C, D, and E, arranged by the proportion of equity exposure. Each Pension Fund can offer up to two schemes per category per Tier. This gives subscribers a range of clearly differentiated equity exposure levels to choose from within a single framework, making it easier to compare products across different fund managers.
• 4A Schemes are special curated or thematic products: NPS Vatsalya for minors, NPS Swasthya focused on health-related pension planning, and NPS MSME designed for small business owners and entrepreneurs. Each is governed by its own specific circular and eligibility conditions.

An important operational detail within this framework: subscribers can switch from one scheme to another across MSF, Lifecycle, Active, and Sanchay options. Such a switch does not reset the vesting period or affect any other conditions governing your account. The original account opening date continues to be the reference point for all vesting calculations.

What Does This Mean for Different Types of NPS Investors?

If you are a new subscriber opening an NPS account after October 1:

You will pay Rs 200 as a one-time onboarding charge if you open through a physical PoP, or Rs 100 if you open digitally. That amount will be recovered in four quarterly installments of Rs 50 each. Your ongoing annual charge will be 0.20% of your AUM. Your minimum initial contribution is Rs 250.

If you are an existing NPS subscriber with an active account:

The annual 0.20% AUM charge now applies under the new standardised framework. Check whether your account was opened through a PoP or through e-NPS directly, as this determines your charge profile. If you have been making regular contributions, the dormant account exemption does not apply to you. Your contribution and allocation choices remain as they are, but you now have the option to review and potentially switch to a different scheme classification under the new framework if it better matches your goals.

If you are an NPS subscriber with a dormant account:

The annual 0.20% PoP charge does not apply to your account for the periods during which it meets the dormancy definition. However, if you resume contributions, you re-enter the active charge bracket from that quarter onward.

If you are an NPS Lite subscriber:

The same charge structure applies to NPS Lite accounts from October 1. The Rs 200 onboarding charge for new accounts, the Rs 100 reduced charge for digital onboarding, and the 0.20% annual AUM charge are all applicable under the revised framework.

If you are in the government sector:

The new scheme classification framework does not apply to your account. Your NPS structure and investment choices continue under the existing government sector framework.

What Investors and HNIs Should Take From All of This?

For individual investors and HNIs who hold NPS accounts as part of their retirement planning, the October 1 changes are generally well-designed and worth understanding properly rather than reacting to.

The 0.20% annual AUM charge is modest. NPS remains one of the lowest-cost pension products available in India when compared to equivalent retirement-focused products in the mutual fund or insurance space. The standardised scheme classification framework adds transparency, making it easier to understand what you are invested in and how to compare options across pension fund managers.

The dormant account exemption is a particularly sensible policy. It prevents inactive subscribers from being slowly eroded by NSP charges they may not even be aware of, which has been a quiet problem across financial products more broadly.

For investors who have not reviewed their NPS asset allocation recently, the new scheme classification framework gives a good reason to do so. The MSF categories with clearly defined equity exposure bands, and the addition of NPS Sanchay for those who prefer a more conservative government-sector-aligned approach, create a more organised landscape for making allocation decisions.

NPS works best as a long-term, disciplined retirement savings vehicle, separate from your equity and debt investments. The changes from October 1 do not alter that fundamental character. They standardise the charge framework and improve the transparency of scheme options, both of which benefit subscribers over time.

Summing Up

The NPS charge revision from October 1, 2026 is not dramatic. Rs 200 onboarding charge recovered over four quarters, 0.20% annual AUM charge, dormant account exemption, and a cleaner scheme classification framework. None of these individually change the core value proposition of the National Pension System as a tax-efficient, long-term retirement savings vehicle.

Together, the circulars issued on August 28 serve to standardize the structure of the schemes, make the process more transparent for subscribers comparing NPS and NPS Lite, and offer reasonable safeguards to inactive accounts.

At Bonanza Wealth, we help investors and HNIs build complete retirement and wealth management strategies that include an honest assessment of every product in the portfolio, including NPS. If you want to understand how the new NPS charge structure and scheme classification framework should factor into your retirement planning, our team is here to help you think through it properly.

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