This govt rule change could make you richer than mutual fund investors: Here’s how

India’s National Pension Scheme (NPS) just became a serious wealth-building contender—stronger, more flexible, and in some cases, even more rewarding than mutual funds, according to wealth advisor Chandralekha MR.

In a LinkedIn post, Chandralekha outlined four major upgrades to NPS that dramatically boost its appeal, especially for young investors looking to compound wealth over decades with minimal costs.

1. 100% Equity Exposure:
Investors can now allocate their entire NPS portfolio to equity, up from the earlier 75% cap. “This is huge for anyone in their 20s,” Chandralekha wrote, pointing out that early exposure to equity compounding, combined with NPS’s tax advantages, significantly strengthens long-term outcomes.

2. Lock-In Now Just 15 Years:
The lock-in period has been slashed from age 60 to just 15 years. This change frees NPS from being solely a retirement tool, allowing it to fund real-life goals like home purchases, education, or mid-career breaks.

3. Multi-Scheme Flexibility:
Earlier, subscribers were locked into a single investment scheme. Now, NPS allows multiple schemes—letting users mix aggressive, balanced, or conservative options within the same account, effectively building a mini portfolio.

4. Costs Remain Ultra-Low:
While fund management fees rose from 0.09% to 0.30%, they’re still far cheaper than most mutual funds, which charge 1–2%. Even direct mutual fund plans hover between 0.5–1%. “Over 30 years, that cost difference compounds to lakhs,” she noted.

Possible Future Changes:
Chandralekha also flagged two proposed reforms: lowering annuity requirements from 40% to 20% and extending the investment age from 75 to 85—both of which could further unlock compounding power.

“These upgrades don’t just make NPS practical,” she said. “They make it potentially richer than most mutual funds—if used right.”