AIFs key to diversifying NPS portfolios, boosting long-term returns: NPS Trust CEO

Alternative investment funds (AIFs) can play a key role in diversifying pension portfolios and delivering risk-adjusted returns for National Pension System (NPS) subscribers, Suparna Tandon, chief executive officer of the NPS Trust, said on Tuesday.

At the IVCA Conclave 2026 on Tuesday, during a fireside chat titled “Pension Capital Meets Private Markets: The NPS–AIF Opportunity,” Tandon highlighted the importance of expanding pension coverage and strengthening the long-term investment ecosystem in India.

She said that pension capital can play a major role in supporting India’s broader capital markets while ensuring sustainable returns for subscribers.

Why are AIFs important for NPS portfolios?

Tandon said investments in alternative assets can help diversify pension portfolios and improve long-term returns for subscribers.

“We are here to enable long-term subscriber returns, risk-adjusted returns for us. AIF is another means of diversification,” she said, stressing that diversification across asset classes is essential for managing long-term retirement funds.

However, she added that governance and transparency remain critical, given that the NPS Trust manages pension savings on behalf of millions of subscribers.

What regulatory changes enable these investments?

Tandon also referred to recent regulatory changes affecting NPS investment structures.

According to her, the A category scheme has been dismantled and merged with equity and corporate bond schemes, enabling greater flexibility in allocating pension funds to alternative investments.

Under the revised framework, up to 1% of government assets under management and up to 5% of non-government AUM can be allocated to the AIF universe.

The change is expected to facilitate greater participation of pension capital in private markets.

How is NPS improving accessibility and transparency?

Tandon said digital innovation and subscriber-centric initiatives are helping make the pension system more accessible and efficient.

She highlighted that technology-driven improvements in pension administration are enhancing transparency, accessibility and overall service delivery for subscribers.

At the same time, collaboration between the public and private sectors will remain important for deepening India’s retirement investment ecosystem and strengthening long-term savings.

The NPS Trust, established by the Pension Fund Regulatory and Development Authority (PFRDA), is responsible for holding and administering NPS assets on behalf of subscribers while overseeing pension funds and intermediaries.

Tandon said strong governance standards and institutional processes will remain central to protecting subscriber interests while enabling the pension system to participate in India’s evolving capital markets.