PFRDA Issues New Pension Fund Registration Guidelines 2025

The Pension Fund Regulatory and Development Authority (PFRDA) has issued a fresh and comprehensive framework titled “PFRDA (Registration of Pension Funds) Guidelines, 2025”, dated 4 December 2025, introducing clearer procedures, eligibility norms, and evaluation mechanisms for entities seeking to operate as Pension Funds under India’s National Pension System (NPS).

The new guidelines—running across 21 pages—aim to strengthen governance, improve transparency, and ensure that only financially sound and professionally competent entities manage the retirement savings of millions of subscribers.

A Two-Step Registration Process

The revised framework reiterates that Pension Fund registration will follow a two-step system:

Selection/Appointment of Sponsor – Entities first apply to be approved as a Sponsor, meaning they must intend to hold at least 20% equity in the proposed Pension Fund.
Registration of the Pension Fund – Once selected, the Sponsor must incorporate a Pension Fund company and seek a Certificate of Registration from PFRDA.

Only after completing both steps, and clearing inspections, can a Pension Fund begin operations.

Who Can Become a Sponsor? Strict Eligibility Norms Announced

The Guidelines set out stringent pre-qualification criteria aimed at ensuring that only robust financial institutions enter the Pension Fund domain. Key eligibility requirements include:

Minimum five years’ experience in fund management (both equity and debt).
Must be a financial sector entity regulated by RBI, SEBI, or IRDAI.
Must have a positive net worth of at least ₹50 crore for the last five financial years and paid-up capital of at least ₹25 crore on the application date.
Must have profit after tax in at least three of the last five years, with no cash losses during this period.
Should manage Monthly Average AUM of ₹50,000 crore, excluding proprietary investments or advisory assets.

Joint venture applicants may also apply if at least one partner meets the above criteria.

Applications can be rejected if incomplete, incorrectly filled, not accompanied by fees, or if the applicant or its key personnel fail the ‘fit and proper’ test.

Detailed Documentation and Multi-Stage Evaluation

Applicants must submit their proposal in three sealed envelopes, covering:

Eligibility documents
Technical parameters
Commercial proposal (IMF quote)

The evaluation process is carried out in a structured, multi-layered manner:

1. Technical Evaluation (Minimum 70 Marks Required)

PFRDA assesses the following broad parameters totalling 100 marks:

Business management (management quality, governance, financial strength)
Investment capabilities (investment process, research quality, systems, team)
Investment track record (performance in equity and fixed income, tracking error, NPAs)
Operational due diligence (risk management, back-office efficiency)
Business plan

Only applicants scoring 70 or more progress to commercial evaluation.

2. Commercial Evaluation (Investment Management Fee)

Applicants must quote their proposed Investment Management Fee (IMF) within the permissible slabs:

AUM Slab	Maximum IMF
Up to ₹10,000 crore	0.09%
₹10,000–₹50,000 crore	0.06%
₹50,000–₹1,50,000 crore	0.05%
Above ₹1,50,000 crore	0.03%

A lower fee may be quoted, but upward revision is not permitted later.

3. Issuance of Letter of Appointment

Successful applicants receive the Letter of Appointment to act as Sponsor.

Obligations After Selection

Once selected, the Sponsor must:

Incorporate a Pension Fund as per PFRDA (Pension Fund) Regulations.
Submit incorporation documents (MoA, AoA, shareholding, net worth certificate, board details etc.).
Pay non-refundable registration fees.
Enter into mandatory agreements with NPS Trust, Custodian, Trustee Bank, and CRA.
Ensure readiness for PFRDA’s physical inspection.

A Pension Fund must commence operations within six months, extendable once for an additional six months.

Governance, Risk Management and Operational Readiness

The guidelines place significant emphasis on:

Risk management systems covering credit, market, and operational risks.
Investment operations, including trading controls and disaster recovery.
Corporate governance, including audit processes and board oversight.
Human resource policies, retention of key personnel, and compliance functions.

These ensure that Pension Funds not only qualify on paper but demonstrate operational maturity before handling subscriber assets.

PFRDA Retains Rights to Reject Applications

PFRDA has clarified that it reserves absolute discretion to:

Accept or reject applications at any stage
Seek more information
Verify data
Require in-person presentations
Decide jurisdictional matters exclusively through courts in New Delhi

The Authority’s interpretation of any ambiguity in guidelines will be final.

Why These Guidelines Matter

With NPS assets growing rapidly and more subscribers opting for professional fund managers, the quality and reliability of Pension Funds have become critical. The new Guidelines of 2025 aim to: