NPS Vatsalya Children’s Retirement Fund: The Pension Fund Regulatory and Development Authority (PFRDA) has made a big change for the NPS Vatsalya scheme. Now, pension funds can put up to 100% of the money in equity, just like the Multiple Scheme Framework (MSF) of the National Pension System (NPS). Pension funds can either follow the pattern set by the regulator, which has no minimum limits on asset allocation, or they can create their own pattern for the Vatsalya scheme.
Earlier in January 2026 the rules said that pension funds could invest 50-75% in equities, 15-20% in government securities, and 10-30% in short-term money market instruments. If a pension fund makes its own investment plan, it must tell subscribers when they join the scheme and also put the information on their website in a place that is easy to find.
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Pension funds can also directly inform NPS Vatsalya subscribers about how their money will be invested, what the scheme features are, the risks, and their approach to investing.
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Saurabh Bansal, founder of Finatwork Investment Advisor, said, “Parents can now select the ‘Active Choice’ mode, a 100 per cent equity allocation when the child is young, maximising the power of time before transitioning to more conservative ‘Auto Choice’ cycles later in life.”
He added, “This flexibility allows Pension Funds to offer aggressive growth strategies that were previously restricted, making NPS a competitive alternative to portfolio management services (PMS) or high-conviction Mutual Funds (MFs).”
Bansal also explained that NPS Vatsalya can now perform like equity mutual funds. “The significantly lower expense ratio (often less than 0.10 per cent) in NPS would generate a significantly larger corpus over a 50-year horizon due to cost-arbitrage. There is no capital gain in NPS despite investing in equity, whereas in equity mutual funds, long-term capital gains (LTCG) are taxed at 12.50 per cent.”
Subscriber Data
PFRDA also said that pension funds can get subscriber data from the central recordkeeping agencies (CRAs). According to the circular dated February 23, 2026, this data can include things like location, gender, contribution habits, and other information. Pension funds can use this data to reach out to subscribers, promote the scheme, improve engagement, check performance, and take corrective actions if needed.
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All data sharing must follow the Digital Personal Data Protection Act, 2023, the IT Act, 2000, and other laws. PFRDA warned that any misuse of subscriber data will lead to regulatory action. Pension funds and their partners must also update their systems to follow the rules.
