Did you know? New tailor-made NPS schemes with 100% equity are not for Vatsalya subscribers.

Until October 2025, the maximum equity one could have in NPS was 75%. With the launch of new schemes under the Multiple Schemes Framework (MSF), pension managers have been allowed to develop tailored schemes that can allocate up to 100% of assets to equities.

However, NPS Vatsalya, which caters to subscribers under the age of 18, and government employees are not eligible for the new schemes.

While NPS for non-government subscribers has been in existence since 2009, they needed to be at least 18 years of age to start investing. In September 2024, the Pension Fund Regulatory and Development Authority (PFRDA) launched NPS Vatsalya, which allowed parents to invest on behalf of their children who are under 18.

For instance, the SBI PF NPS Jeevan Swarna Retirement Yojana will invest at least 75% in equities at any time and can increase up to 100% in equities. They can also invest up 5% in alternative assets.

Similarly, the Tata Pension Fund NPS Smart Retirement Fund can invest 70 to 100% in equities. It can also allocate up to 30% each to government securities or corporate bonds, and 5% to alternative assets.

Earlier, NPS subscribers could allocate up to 75% of their funds to equities under the active choice option. In the auto choice option, which follows a lifecycle-based asset allocation approach, the conservative plan has a 25% equity exposure, the moderate plan (the default option) has a 50% equity exposure, and the aggressive plan offers a 75% equity exposure.

Not for NPS Vatsalya

While there is no explicit mention that the new tailor-made schemes under MSF are not available to NPS Vatsalya subscribers, pension fund chief executives confirmed that, as of now, the MSF options do not apply to NPS Vatsalya.

Under NPS Vatsalya, there is no provision for premature exit, explained Sriram Iyer, managing director and chief executive of HDFC Pension.

Subscribers are allowed only partial withdrawals for specific purposes such as education, medical treatment, or disability. In contrast, regular NPS permits premature exit after five years, provided that 80% of the corpus has been annuitized.

He added that NPS Vatsalya funds cannot be withdrawn before the age of 18, while the new NPS schemes come with a vesting period of 15 years.

“Technically, this may be one of the reasons why new schemes aren’t offered in Vatsalya,” said Iyer

Rahul Bhagat, chief executive of DSP Pension, said equities are preferred for younger investors as they can better withstand volatility. In that respect, Bhagat said a tailored portfolio with 100% equity would have been a good option for NPS Vatsalya subscribers.

The MSF schemes are designed for individuals who are at least 18 years old, and therefore, NPS Vatsalya subscribers are not eligible for them, said Sandeep Pandey, chief investment officer-fixed income at SBI Pension Funds.

However, once the child reaches the age of 18, they can transition to tier I and opt for 100% equity under MSF. For context, non-government subscribers can freely transfer from common schemes to MSF without any tax implications.