NPS, UPS, and APY investments will now be invested in gold, silver, and ETFs. This change aims to make NPS more diversified, flexible, and offer better returns.
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New Pension System: The government has made significant changes to the rules of the National Pension System (NPS), Unified Pension Scheme (UPS), and Atal Pension Yojana (APY). The government says the changes will benefit investors. These rules have come into effect with immediate effect.
Indeed, the Pension Fund Regulatory and Development Authority (PFRDA) has made significant amendments to the investment rules for pension schemes through a circular issued on December 10, 2025. Gold and silver ETFs, Nifty 250 Index, and Alternative Investment Funds (AIFs) can now be included in the investment portfolios of these schemes, which was previously not possible.
This means that investments in NPS, UPS, and APY will now be invested in gold, silver, and ETFs. This change aims to make NPS more diversified, flexible, and offer better returns.
What changes have been made in the new rules?
The new PFRDA circular details portfolio allocation for NPS, UPS, and APY. Most importantly, pension funds can now invest in several new asset classes.
Gold and Silver ETFs: Pension funds can now invest in SEBI-approved gold and silver ETFs. These investments fall under the alternative investment category and diversify portfolios while controlling risk. A separate 1% limit has been set for gold and silver ETFs for public sector funds.
Nifty 250 Index and Equity: Investments in Nifty 250 Index stocks, equity ETFs, and stocks of selected BSE 250 companies are now permitted as part of the emerging market segment of NPS portfolios. The total equity investment limit is 25%, which will include Nifty 250 and related equity investments.
Alternative Investment Funds (AIFs), REITs, and InvITs: Under the new PFRDA policy, pension funds can also invest in REITs (Real Estate Investment Trusts), InvITs (Infrastructure Investment Trusts), and Category I and II AIFs. However, the maximum limit for total alternative investments is 5%, and separate risk management rules apply.
For example, total investments in a single industry cannot exceed 15%. Similarly, a pension fund’s investment limit in a single group of companies is limited to a maximum of 5% (Sponsor Group) or 10% (Non-Sponsor Group). This provides diversification while maintaining portfolio security.
What will be the impact on NPS investors?
This change could firmly establish NPS as a return-oriented investment option, from a merely secured interest-based scheme. While previously, pension investments were primarily based on government securities and corporate debt, now alternative assets like gold and silver and equities will offer investors the potential for better returns over the long term.
