IFSCA’s Proposed Pension Fund Regulations, 2025: Paving the Way for Global Retirement Savings from GIFT City

Background – Pension Fund Framework in gift city

India’s International Financial Services Centre (IFSC) at GIFT City is steadily transforming into a global financial hub. After reforms in fund management, insurance, and banking, the IFSCA has now turned its focus toward pension products which is a critical building block for long-term wealth creation and financial stability in proposed Pension Fund Regulations in GIFT City.

On October 2025, IFSCA released a Consultation Paper on the Proposed Pension Fund Regulations, 2025, outlining a comprehensive framework for the creation and management of voluntary pension schemes from GIFT City.

The goal is simple yet ambitious — to make GIFT City a global destination for retirement savings by enabling Non-Resident Indians (NRIs) and foreign citizens to invest in pension products managed under international regulatory standards.

Key Objectives of the Proposed Pension Fund Regulations in GIFT City

IFSCA’s proposed framework is built on five major objectives:

1. Subscriber Protection: Safeguarding the interests of NRIs and foreign subscribers by ensuring transparency, regulated fund management, and investor grievance mechanisms.

2. Robust Regulatory Oversight: Introducing clear licensing, eligibility, and operational standards for Pension Fund Managers (PFMs) to ensure responsible governance.

3. Operational Flexibility: Allowing subscribers to choose from multiple contribution structures, scheme types, and flexible withdrawal options — designed around international best practices.

4. Global Competitiveness: Enabling pension funds in GIFT City to invest across global markets and Indian assets, making the city a competitive hub for international retirement savings.

5. Healthcare Integration: Introducing an innovative healthcare benefit option that allows part of the pension contribution to be earmarked for medical expenses — a first for Indian pension frameworks.

Core Provisions of the Proposed Regulations

1. Registration and Eligibility for Pension Fund Managers (PFMs)

Only regulated entities with a presence in GIFT City can register as Pension Fund Managers.Each PFM must have:

• Minimum net worth of USD 1 million,

• At least 10 years of experience in fund, pension, or insurance management, and

• Qualified professionals handling investment, compliance, and risk functions.

This ensures that only credible, experienced players manage long-term retirement savings.

2. Voluntary Participation for NRIs and Foreign Citizens

Participation in GIFT City pension schemes will be entirely voluntary and open to NRIs and foreign citizens above 18 years.Subscribers can select contribution frequency (monthly, quarterly, annual, or lump sum) and tailor investment strategies to suit their risk appetite.

3. Flexible Investment and Withdrawal Options

The framework allows both active and auto-choice options:

• Active Choice: Investors can customize their asset allocation.

• Auto Choice (Life Cycle Fund): Allocation automatically shifts from equity to conservative assets with age.

Withdrawal options include:

• Partial withdrawals (for education, health, or housing),

• Systematic Withdrawal Plans (SWP),

• Lifetime annuities, and

• Combination or deferred withdrawal options until age 75.

This mirrors global pension flexibility seen in markets like Singapore and the UK.

4. Investment Diversification – India and Beyond

GIFT City pension funds can invest in:

• Equities, bonds, real estate, infrastructure, and alternative assets.

• Up to 100% exposure to Indian markets, and

• Up to 50% exposure to U.S. markets and 20% per other country globally.

This structure balances growth, stability, and global diversification — making it appealing to global investors.

5. Risk Management and Governance

IFSCA mandates a comprehensive risk management framework covering:

• Market, credit, liquidity, operational, and compliance risks.

• Mandatory Board-level Risk Committee and three lines of defence model.

• Annual and concurrent audits, transparent reporting, and full data security compliance.

6. Healthcare Benefit Option

A unique feature is the Healthcare Sub-Account, allowing up to 5% of contributions to be earmarked for medical needs.Funds in this sub-account may be accessed for healthcare emergencies or rolled into the main pension corpus upon retirement.

This innovation makes GIFT City pension products distinct from traditional retirement plans.

Impact on GIFT City Stakeholders

Impact on Investors

NRIs and global investors can now build a retirement portfolio managed in India’s only international financial centre.They benefit from:

• Global investment exposure,

• Transparent governance,

• Digital access to accounts, and

• Health-linked pension flexibility.

This brings international quality retirement planning closer to the Indian diaspora.

Impact on Financial Service Providers

For fund managers, custodians, and trustees, the regulations open a new product category in GIFT City’s ecosystem.Asset managers can expand into pension products, diversify business lines, and attract long-term institutional capital.The healthcare and ESG integration components also create scope for innovation and cross-border partnerships.

Impact on the GIFT City Ecosystem

The introduction of pension funds strengthens GIFT City’s role as a full-spectrum financial hub, covering banking, insurance, funds, fintech, and now retirement savings.It aligns GIFT City with other global pension centres such as Singapore, Luxembourg, and London — positioning it as a preferred base for cross-border pension management.

Strategic Takeaway

IFSCA’s proposed Pension Fund Regulations, 2025 mark a strategic leap toward establishing India’s first international pension fund ecosystem.By merging global regulatory practices with India’s strong financial foundation, GIFT City could soon emerge as the destination of choice for NRIs and global citizens seeking efficient, tax-aligned, and professionally managed retirement savings.

This move not only deepens India’s financial markets but also reinforces GIFT City’s vision to be Asia’s most trusted financial services gateway.

Disclaimer

This article is a simplified overview of the IFSCA Consultation Paper on the Proposed Pension Fund Regulations, 2025.It is intended for informational and educational purposes only and should not be treated as legal, investment, or financial advice.For complete details, please refer to the official document available at www.ifsca.gov.in.