What NPS pension funds charge you from April 2026: the new IMF slabs for private-sector vs government subscribers
PFRDA's new NPS investment management fee from 1 April 2026: 0.12% to 0.04% for private-sector schemes vs 0.09% to 0.03% for government, and what the gap costs by 60.
Key points
- PFRDA's circular of 06 March 2026 sets separate investment management fee tables for non-government and government NPS schemes for five years from 01 April 2026.
- Non-government schemes pay 0.12% to 0.04% a year by pension fund AUM band, while government schemes keep their existing 0.09% to 0.03% slabs.
- In Oquilia's 20-year illustration the gap between the top and bottom private-sector bands is Rs 3,07,689 at age 60, so fund choice matters most near retirement.
Photo: Dietmar Rabich / Wikimedia Commons, CC BY-SA 4.0 (cropped). Representational image.
From 01 April 2026, the fee that pension funds deduct for managing National Pension System (NPS) money is set by a new schedule. PFRDA Circular PFRDA/2026/15/REG-PF/04, dated 06 March 2026, fixes the Investment Management Fee (IMF) for a period of five years, following the recommendations of an Expert Committee chaired by U.K. Sinha, a former chairman of SEBI. The headline change is that private-sector and All Citizen subscribers now sit on a separate, and higher, fee table than government-sector subscribers, whose existing slabs continue unchanged.
This guide sets out both tables, explains which of your schemes falls under which, works through what a 0.12% fee versus a 0.04% fee does to a corpus over 20 years, and then follows the money to exit, where the 80/20 and 60/40 withdrawal rules and the 60% tax exemption under Section 10(12A) take over. You can model your own numbers on the NPS calculator as you read.
The Scheme Explained
The IMF is the charge a pension fund levies for managing your money, expressed as a percentage of AUM (assets under management). Under the 06 March 2026 circular, the rate is determined by the size of the pension fund's AUM in the relevant sector, not by the size of your own account. A subscriber with Rs 2 lakh and a subscriber with Rs 2 crore in the same fund face the same percentage rate.
The circular creates two tables. Table A covers the Non-Government Sector (NGS). Table B covers the Government Sector (GS), and PFRDA has stated that the existing GS slabs continue for the five-year period from 01 April 2026.
Table A: Non-Government Sector IMF (from 01 April 2026)
| Pension fund AUM (NGS) | IMF per year |
|---|---|
| Up to Rs 25,000 crore | 0.12% |
| Rs 25,000 crore to Rs 50,000 crore | 0.08% |
| Rs 50,000 crore to Rs 1,50,000 crore | 0.06% |
| Above Rs 1,50,000 crore | 0.04% |
Table B: Government Sector IMF (existing slabs continue)
| Pension fund AUM (GS) | IMF per year |
|---|---|
| Up to Rs 10,000 crore | 0.09% |
| Rs 10,000 crore to Rs 50,000 crore | 0.06% |
| Rs 50,000 crore to Rs 1,50,000 crore | 0.05% |
| Above Rs 1,50,000 crore | 0.03% |
Two features stand out. First, at every AUM band the NGS rate is higher than the GS rate: 0.12% against 0.09% in the smallest band, and 0.04% against 0.03% in the largest. Second, the GS table starts its second band at Rs 10,000 crore, while the NGS table holds its top rate of 0.12% all the way to Rs 25,000 crore, so a smaller private-sector fund keeps its highest rate across a band 2.5 times as wide.
The circular describes the AUM bands but your NAV statement will not show which band applies on a given day, because that depends on the fund's total sectoral AUM. Readers who want to know precisely how the bands are applied to a fund's AUM, whether on the whole amount or slab by slab, should read the circular itself on pfrda.org.in. For planning, the useful range is simply 0.04% to 0.12% for NGS and 0.03% to 0.09% for GS.
Which schemes fall under which table
The sector label is decided by scheme, not by your employer's name. According to the 06 March 2026 circular, the split is as follows.
| Table A: Non-Government Sector | Table B: Government Sector |
|---|---|
| Scheme E (equity), Tier I and Tier II | Central Government (CG) |
| Scheme C (corporate debt), Tier I and Tier II | State Government (SG) |
| Scheme G (government securities), Tier I and Tier II | UPS CG (Unified Pension Scheme, Central Government) |
| NPS Vatsalya | Atal Pension Yojana (APY) |
| NPS Lite |
There is one carve-out worth noting for government employees. A GS subscriber who has chosen Auto Choice, or 100% G-sec under Active Choice, pays the IMF applicable to the composite scheme, per the circular. In plain terms, a central or state government employee who stays in the default or all-gilt option remains on Table B pricing.
A private-sector employee in corporate NPS, a self-employed All Citizen subscriber and a parent running an NPS Vatsalya account for a child all sit in Table A. If you hold a Tier II account alongside Tier I, both are priced from Table A, because the circular lists E, C and G across both tiers.
What else PFRDA collects
The circular also leaves the pension fund's annual fee to PFRDA unchanged at 0.015% of AUM or Rs 10 lakh, whichever is higher. Separately, 0.0025% of AUM a year is directed to the Association of NPS Intermediaries for outreach. Both figures are expressed against the fund's AUM; the circular is the authoritative text on how they are borne.
The IMF works like an expense ratio on a mutual fund: it is deducted inside the NAV, so you never see a separate debit. That invisibility is precisely why the slab you sit in matters over a 20- or 30-year horizon.
Tax on Withdrawal
The IMF does not change how NPS money is taxed, but a fee that compounds for decades changes the size of the pot that tax then applies to. The rules at exit come from two sources that no longer match each other, and it is worth being precise.
What PFRDA lets you withdraw
Under the PFRDA (Exits and Withdrawals under the NPS) (Amendment) Regulations, 2025, notified on 19 December 2025, the limits depend on sector.
| Rule at normal exit | Non-Government Sector | Government Sector | NPS Lite |
|---|---|---|---|
| Maximum lump sum | 80% | 60% | 60% |
| Minimum annuity purchase | 20% | 40% | 40% |
| Full lump sum allowed if corpus is at or below | Rs 8 lakh | Rs 8 lakh | Rs 2 lakh |
| Middle band (Rs 6 lakh lump sum cap) | Above Rs 8 lakh up to Rs 12 lakh | Above Rs 8 lakh up to Rs 12 lakh | Not specified |
For a premature exit in the non-government sector, the maximum lump sum is 20% and the minimum annuity is 80%, with a full lump sum allowed where the corpus is at or below Rs 5 lakh. The amendment removed the earlier five-year lock-in for premature exit. Subscribers can now stay invested up to age 85, so the IMF keeps applying for as long as you defer.
What the Income-tax Act exempts
Section 10(12A) of the Income-tax Act exempts the payment on closure or opting out only to the extent it does not exceed 60% of the total amount payable, as it has since 01 April 2020. PFRDA's 80% limit for NGS subscribers is a withdrawal limit, not a tax limit. On an NGS exit, the slice between 60% and 80% of the corpus is therefore not covered by the 10(12A) exemption, and no Finance Act amendment aligning the two has been located. Oquilia does not assert how that 20% slice is taxed; confirm it with a chartered accountant or the department's guidance on incometax.gov.in before you file.
Partial withdrawals are cleaner. Section 10(12B) exempts withdrawals up to 25% of the subscriber's own contributions, which matches PFRDA's limit of 25% of own contributions (excluding employer share and returns). PFRDA allows up to 4 partial withdrawals before 60, with a gap of at least 4 years, after a minimum of 3 years in the scheme.
The annuity leg
The pension you receive from the annuity purchase is taxed as income in the year you receive it, at your slab rate. Under the new regime for FY 2025-26, income up to Rs 4 lakh is taxed at nil, rising in Rs 4 lakh steps through 5%, 10%, 15%, 20% and 25% to 30% above Rs 24 lakh, plus 4% cess. The Section 87A rebate in the new regime is up to Rs 60,000 for total income up to Rs 12 lakh. Surcharge in the new regime is capped at 25%.
Worked Drawdown
The following example isolates the effect of the fee slab. It is an illustration, not a forecast: the 9% gross return is an assumption chosen for arithmetic, and the model treats the IMF as a straight deduction from that return, which simplifies how a daily NAV charge works.
Assumptions: a 40-year-old private-sector subscriber with an existing NPS Tier I corpus of Rs 30 lakh, contributing Rs 1,20,000 a year (Rs 10,000 a month) at the start of each year until age 60. Assumed gross return: 9% a year. The only variable is the IMF.
Stage 1: accumulation, age 40 to 60
| Age | Corpus at 0.12% IMF (NGS top band) | Corpus at 0.04% IMF (NGS bottom band) | Corpus at 0.09% IMF (GS top band) | Corpus at 0.03% IMF (GS bottom band) |
|---|---|---|---|---|
| 45 | Rs 53,70,590 | Rs 53,89,298 | Rs 53,77,599 | Rs 53,91,640 |
| 50 | Rs 89,98,003 | Rs 90,58,789 | Rs 90,20,753 | Rs 90,66,414 |
| 55 | Rs 1,45,48,574 | Rs 1,46,94,403 | Rs 1,46,03,093 | Rs 1,47,12,733 |
| 60 | Rs 2,30,41,907 | Rs 2,33,49,596 | Rs 2,31,56,813 | Rs 2,33,88,345 |
Over 20 years the gap between the top and bottom NGS bands is Rs 3,07,689 (Rs 2,33,49,596 minus Rs 2,30,41,907), on identical contributions and identical gross returns. That is 0.08 percentage points of annual fee turning into roughly 1.3% of the final corpus. Compared with a government employee on the 0.09% top GS rate, the private-sector subscriber on 0.12% ends Rs 1,14,906 lower.
To put the slab in rupees per year: on a corpus of Rs 50 lakh, 0.12% is Rs 6,000 a year and 0.04% is Rs 2,000. On Rs 1 crore it is Rs 12,000 against Rs 4,000. On the same Rs 1 crore, the GS range runs from Rs 9,000 at 0.09% down to Rs 3,000 at 0.03%.
Stage 2: exit at 60
Take the NGS subscriber at the 0.12% rate with Rs 2,30,41,907 at age 60, and the same subscriber at 0.04% with Rs 2,33,49,596. Both corpora exceed Rs 12 lakh, so the standard percentage split applies.
| Item at exit | NGS at 0.12% IMF | NGS at 0.04% IMF |
|---|---|---|
| Total corpus | Rs 2,30,41,907 | Rs 2,33,49,596 |
| Maximum lump sum (80%) | Rs 1,84,33,526 | Rs 1,86,79,677 |
| Minimum annuity purchase (20%) | Rs 46,08,381 | Rs 46,69,919 |
| Exempt under Section 10(12A) (60%) | Rs 1,38,25,144 | Rs 1,40,09,758 |
| Slice between 60% and 80% (confirm tax treatment) | Rs 46,08,381 | Rs 46,69,919 |
A government-sector subscriber on 0.09% with Rs 2,31,56,813 faces a different split: a maximum 60% lump sum of Rs 1,38,94,088 and a minimum 40% annuity of Rs 92,62,725. Because the GS lump sum cap equals the 10(12A) ceiling, the government subscriber's whole lump sum sits inside the exemption.
Stage 3: deferring the exit to 65
PFRDA allows subscribers to remain invested up to 85. If the NGS subscriber makes no further contributions and simply defers exit by five years at the same assumed 9% gross return, the corpus at 0.12% grows from Rs 2,30,41,907 to Rs 3,52,58,106, while the corpus at 0.04% grows from Rs 2,33,49,596 to Rs 3,58,60,376. The gap widens from Rs 3,07,689 at 60 to Rs 6,02,270 at 65, almost doubling in five years, because the fee now bites on a much larger balance.
The lesson for drawdown planning is that the slab matters most when the corpus is largest, which is in the years just before and after 60. Compare the post-exit options on the annuity vs SWP calculator and test withdrawal rates on the retirement drawdown calculator.
What you can and cannot control
You cannot choose your IMF directly, because it follows your pension fund's sectoral AUM. You can, however, compare pension funds: under Table A, a fund with NGS AUM above Rs 1,50,000 crore charges 0.04%, one-third of the 0.12% charged by a fund below Rs 25,000 crore. NPS permits you to change your pension fund, and the fee band is one of several factors, alongside the fund's track record, to weigh when you do. A difference of 0.08 percentage points is small next to a 1 percentage point difference in returns, so do not switch on fee alone.
FAQ
What is the NPS investment management fee from April 2026?
Under PFRDA Circular PFRDA/2026/15/REG-PF/04 of 06 March 2026, non-government sector schemes pay 0.12% to 0.04% a year depending on the pension fund's AUM band, and government sector schemes pay 0.09% to 0.03%. The schedule applies for five years from 01 April 2026.
Am I in the non-government or government sector table?
If you hold Scheme E, C or G in Tier I or Tier II, or an NPS Vatsalya account, you are on Table A (non-government). If you are in the Central Government, State Government, UPS CG, APY or NPS Lite schemes, you are on Table B (government). Corporate NPS subscribers fall in Table A.
Does the IMF depend on how much money I have?
No. According to the circular, the rate is set by the pension fund's AUM in the relevant sector. A Rs 1 lakh account and a Rs 1 crore account in the same fund pay the same percentage, which translates to Rs 120 and Rs 12,000 a year respectively at 0.12%.
I am a government employee in Auto Choice. Which fee applies?
Per the circular, GS subscribers in Auto Choice or 100% G-sec under Active Choice pay the IMF of the composite scheme, so you remain on Table B pricing of 0.09% to 0.03%.
Is the whole 80% lump sum covered by the 60% exemption?
Not necessarily. Non-government subscribers may withdraw up to 80% under the regulations notified on 19 December 2025, but Section 10(12A) exempts only up to 60% of the amount payable. On a Rs 1 crore corpus, that leaves a Rs 20 lakh slice whose tax treatment you should confirm with an adviser.
Has the annual fee pension funds pay PFRDA changed?
No. The circular keeps it at 0.015% of AUM or Rs 10 lakh, whichever is higher. A further 0.0025% of AUM a year goes to the Association of NPS Intermediaries for outreach.
How much does the fee difference matter over a career?
In Oquilia's illustration, a subscriber starting with Rs 30 lakh at 40 and adding Rs 1,20,000 a year at an assumed 9% gross return ends at 60 with Rs 3,07,689 more at a 0.04% fee than at 0.12%. Deferring exit to 65 widens that gap to Rs 6,02,270.