Corporate NPS can provide the additional pension layer, says PFRDA’s Jagpal: What you need to know about this scheme

Retirement planning is no longer just an individual’s responsibility. With employees changing jobs more frequently and retirement potentially lasting 20-30 years after regular income stops, companies have an important role to play in helping workers build a sufficient retirement corpus.

Speaking at Outlook Money’s Retire Smart: Financial Wellness Leadership Series, Randip Singh Jagpal, Whole Time Member (Law) of the Pension Fund Regulatory and Development Authority (PFRDA), said workplaces can play a crucial role in turning pension policies into long-term financial security.

He emphasised that India needs more than “another savings product” and instead requires a “complete pension solution”. Jagpal highlighted Corporate NPS as one way employers can strengthen their employees’ retirement benefits.

According to the Outlook Money report published on 8 August, Corporate NPS had around 27,000 registered employers and 2.83 million employees as of July 2026, with assets under management of about ₹3 lakh crore.

Why Corporate NPS is gaining importance?

Jagpal said NPS offers several features that make it relevant for today’s mobile workforce, including professional management, relatively low costs, tax efficiency, investment flexibility and portability across jobs and locations.

For employers, corporate NPS is a powerful tax-efficient compensation tool, as employer contribution of up to 14% is deductible.

Why corporate NPS does not have to replace EPF?

“Corporate NPS need not replace EPF. It is something that can supplement it,” Japgal said, particularly for employees earning substantially above the statutory EPF wage ceiling.

“The employer can maintain the EPF base and then use corporate NPAs to build an additional retirement corpus,” he noted.

His message to employers was straightforward: comply with statutory retirement requirements, but also help employees save beyond the minimum.

“The EPF can provide the foundation. The corporate NPS can provide the additional pension layer,” he said as per the Outlook Money report.

Jagpal suggested four steps for employers: review existing retirement benefits, offer NPS as part of compensation, explain its benefits simply, and use digital platforms such as NPS Tatkal, Star NPS and the upcoming NPS Central for easy onboarding.

What is Corporate NPS?

Corporate NPS is the employer-linked version of the National Pension System. A company can offer NPS to its employees as part of its retirement benefits. Contributions can come from the employer, employee, or both, depending on the company’s compensation structure.

It can operate alongside retirement benefits such as EPF and does not require the employer to independently manage investment and pension administration.

Who is eligible for Corporate NPS?

Employees of organisations that have adopted Corporate NPS can enrol if they:

• are Indian citizens, NRIs or OCIs.
• are between 18 and 85 years of age.
• register through their employer.

Eligible organisations include companies, LLPs, partnership firms, government entities, public-sector enterprises, trusts and societies, among other permitted entities.

How does Corporate NPS work?

After an employer adopts the scheme, employees can open an NPS account and receive a PRAN, which remains portable when they change jobs or locations.

Employers and employees can decide the contribution structure. Depending on the corporate arrangement, the employer or employee can select the pension fund and investment approach.

Subscribers can broadly choose between:

• Active Choice: The investor decides the allocation among equity, corporate bonds and government securities within prescribed limits.
• Auto Choice: Asset allocation changes with age, generally reducing equity exposure as the subscriber gets older.

What are the key benefits for employees?

• Portability: The same NPS account can continue across jobs and locations.
• Tax benefits: Employees can claim deductions on their own NPS contributions under Sections 80CCD(1) and 80CCD(1B). Employer contributions under Section 80CCD(2) are deductible up to 10% of salary under the old tax regime and 14% under the new regime.
• Investment flexibility: Employees can choose among permitted pension funds and investment strategies, where the employer arrangement allows it.
• Professional management: Investments are managed through the NPS architecture rather than by the employee directly.
• Low-cost structure: NPS is designed as a relatively low-cost retirement investment framework.

Disclaimer: This is only for informational and educational purposes. Please visit the official website for the latest updates.