In a major update, the pension body has allowed NPS, UPS and APY schemes to invest in silver and gold ETFs as well as the Nifty 250 index. Not just that, they can now also invest in Alternative Investment Funds (Category I and II).
These updates were revealed in a master circular on investment guidelines for Unified Pension Scheme/National Pension System/Atal Pension Yojana schemes pertaining to central/ state government (default), corporate CG, NPS Lite, Atal Pension Yojana and APY Fund Scheme options.

The master circular, which supersedes many previous investment circulars, sets investment exposure limits for NPS, UPS and APY in equity, debt, short-term instruments, exchange-traded funds (ETFs), including gold and silver, and other schemes.

According to the PFRDA circular issued on December 10, 2025, “This Master Circular is being issued in exercise of powers of the Authority conferred under sub-clause (b) of sub-section (2) of Section 14 read with Section 23 of the PFRDA Act, 2013 and sub-regulation (1) of Regulation 14 of PFRDA (Pension Fund) Regulations, 2015 as amended from time to time. This master circular supersedes the earlier circular dated 28.03.2025 and all the circulars/ letters mentioned in the Appendix. This master circular shall be effective immediately.”

Kurian Jose, CEO, Tata Pension Management, says “The recent changes in Investment guidelines is an excellent step towards making NPS investments contemporary by enabling multiple avenues providing diversification and return enhancing options to the investors. By allowing judicious, strictly capped exposure to Gold and Silver ETFs, Alternative Investment Funds (AIFs), REITs, and municipal bonds, the new framework introduces crucial diversification and access to specialized asset classes, enhancing the potential for higher risk-adjusted returns without compromising the system’s fundamental safety”_

Investment types and limits for NPS, UPS, APY schemes under revised pension body rules

A. Government Securities (G-Secs) — Up to 65%

Pension funds can allocate up to 65% of their portfolio to government securities. This includes:

• Central and State government securities
• Fully serviced bonds issued by PSUs under the Extra Budgetary Resources (EBR) route
• Gilt mutual funds, capped at 5% of the G-Sec portfolio

This category continues to remain the core of NPS and APY investments due to its stability and sovereign backing

B. Corporate Debt / Debt Instruments — Up to 45%

This category covers a wide range of high-quality debt instruments, including:

• Listed corporate bonds, generally requiring a minimum AA credit rating
• Basel III Tier-1 bonds, capped at 2% of scheme AUM
• Rupee-denominated bonds issued by IFC, IBRD, and ADB
• Term deposits of eligible banks, with a maximum 10% exposure per bank
• Debt mutual funds, capped at 5% of the debt portfolio
• Debt issued by REITs and InvITs
• Municipal bonds with AAA rating
• At least AA rating from two credit rating agencies (with limited exceptions)
• Up to 10% of the debt portfolio may be invested in securities rated between AA– and A
• Any exposure to securities below AA beyond this permitted limit must be hedged using credit default swaps (CDS)
• Residual maturity rules must be strictly followed, ensuring alignment with pension liability timelines.

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