PFRDA allows NPS subscribers to invest in gold and silver ETFs

Retirement Pension

PFRDA now allows investments in gold and silver ETFs, as well as the NIFTY50 index and Alternative Investment Funds (category I and II), for subscribers of government contributory pension schemes—NPS, APY, and UPS.

The announcement is part of the master circular on investment guidelines for subscribers of the National Pension Scheme, Unified Pension Scheme, and Atal Pension Yojana, issued on December 10 by the Pension Fund Regulatory and Development Authority of India.

While the option for subscription on gold and silver ETFs is provided by default to central and state government employees, it is also expanded to low-cost pension plans—Corporate CG, NPS Lite, and Atal Pension Yojana. Subscribers to these pension funds can invest up to 5 percent, the maximum investment limit, in gold and silver ETFs.

The move also marks the Central government’s effort to allow NPS subscribers to gain exposure to returns from the commodity sector, where gold and silver are the major components under its precious metals segments— and their prices have doubled in 2025 compared to last year.

"We've seen NPS steadily evolving, and it could become a one-stop asset allocation platform. Earlier, it allowed investments in equities, government bonds, corporate bonds, and others. Now, commodities are also part of this allocation,” said Manav Modi, Commodities Analyst, at Motilal Oswal Financial Services Ltd.

The analyst explains that NPS will be an additional platform for investors to choose gold and silver ETFs. However, he suggests subscribers to cautiously decide weightages, risk profile, as well as investment approach for gold and silver.

“Now, the platform and sources have increased based on how much, what, and where to invest. These are pension funds, and some weightages need to be decided, as well as the risk profile attached to these pension fund groups,” explained Modi.

According to PFRDA, the Pension Fund and NPS Trust will take suitable steps to control and optimize the cost of management of the schemes.

Permissible limit for NPS, UPS, and APY subscribers

The government-sponsored pension funds— NPS, UPS, and APY— are contributory schemes for employees that allow subscribers to save for their retirement, and the government matches their contribution.

For NPS subscribers, the government adds 14 percent of the employee’s basic pay and dearness allowance (DA). Under UPS, the government contributes 10 percent of basic pay and DA, as well as another 8.5 percent of the total employees’ corpus under the scheme. In both schemes, employees contribute 10 percent of their basic pay and DA. Whereas, under the APY scheme, the government co-contributes 50 percent of the subscriber's contribution up to Rs 1,000 per annum.

Subscribers of NPS have the option to open a Tier II account, which offers withdrawal flexibility. Tier I and Tier II allow a choice of investment in market-linked products up to a specific permissible limit based on the type of investment, though returns are not guaranteed— which means the subscribers take the risk of their own investment.

UPS, on the other hand, guarantees an assured payout, with an option for investment choices for an individual corpus. Recently, the government also gave its employees under the NPS the option to switch to the UPS.

The revised investment types and permissible investment limits for NPS, UPS, and APY schemes are as follows:

• Government securities, other securities, mutual funds: Up to 65% 
• Debt instruments and related investments: Up to 45%
• Short-term debt instruments and related investments: Up to 10%
• Equities and related investments: Up to 25%
• Asset-backed, trust structured, and miscellaneous investments: Up to 5%