India’s pension reset: Why 2025 was a turning point

Pension System (NPS) to increase its wider acceptance among households, while the Employees Provident Fund Organization (EPFO) took some tough calls to plug complete withdrawals of the provident fund. Here are the headline events of 2025 in the space that you should take note of.NPS is a defined contribution plan. The original product required an investment for a certain number of years, and on vesting or maturity, which coincides with the traditional retirement age of 60, you annuitise at least 40% of that corpus to buy a pension for life.

The rest was a tax-free corpus in your hands.While the structure was simple, it didn’t find many takers under the voluntary all-citizen model. From an investor’s perspective, there were two key deterrents. First, for a long-term retirement product, equity exposure was capped at 75%, limiting growth potential during the accumulation phase.

Second, the mandatory annuitisation rule forced investors to commit–years in advance–to buying an annuity at retirement, without any clarity on the interest rates or payouts that would prevail then.For pension fund managers (PFMs), it was the wafer-thin costs that acted as the main barrier to pushing NPS.Reforms in 2025 addressed all these problems and more, making NPS ready for increased traction in 2026. Spearheaded by a change in leadership at the Pension Fund Regulatory and Development Authority (PFRDA), chairman S. Raman’s task for NPS was clear: create a product that finds takers across segments of the working population.