Framework for Regulatory Sandbox for Facilitating Responsible Innovation in the Pension Sector
PFRDA circular PFRDA/2026/31/REG-CRA/02 · 02 Jun 2026
PFRDA circular PFRDA/2026/31/REG-CRA/02 · 02 Jun 2026
Summary
Check the official recordThe Pension Fund Regulatory and Development Authority (PFRDA) has introduced a Regulatory Sandbox framework to provide a controlled, time-bound environment for testing innovative products, services, and business models within the pension sector. The framework allows registered intermediaries and eligible non-registered entities (including FinTechs) to test solutions with a limited set of voluntary subscribers. Applicants must demonstrate genuine innovation, robust risk management, and clear exit strategies. While the Authority may grant temporary, case-specific regulatory relaxations, it does not waive compliance with core legal requirements like KYC, AML, and data protection. Testing is generally limited to nine months, subject to monitoring, reporting, and potential revocation for non-compliance. Participation does not constitute regulatory endorsement or legal waivers.
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Circular No. PFRDA/2026/31/REG-CRA/02
02 June 2026
To
All PFRDA Registered Intermediaries and other stakeholders
Madam / Sir,
Subject: Framework for Regulatory Sandbox for Facilitating Responsible Innovation in the Pension Sector
In exercise of the powers conferred under Section 14 of the Pension Fund Regulatory and Development Authority Act, 2013, and with a view to fostering responsible innovation in the pension sector while ensuring protection of subscribers’ interests and orderly development of the pension system, the Authority hereby specifies a framework for operationalization of Regulatory Sandbox.
The Regulatory Sandbox is intended to provide a controlled and time-bound environment to entities for testing innovation both in terms of new products and services as well as new ways of delivering existing products and services in the pension sector.
The detailed framework for the Regulatory Sandbox is specified in Annexure I.
This circular shall come into force with immediate effect. In case of any inconsistency between this circular and any earlier instructions issued by the Authority on the subject, the provisions of this circular shall prevail to the extent of such inconsistency.
This circular is issued under Section 14 of the PFRDA Act, 2013, and is available on the PFRDA website (www.pfrda.org.in).
Yours Sincerely,
(Signature)
General Manager
Annexure I
FRAMEWORK FOR REGULATORY SANDBOX
1. DEFINITIONS
1.1 For the purposes of this framework, the expression "Regulatory Sandbox" means a live testing environment where new products, processes, services, business models, and like activities may be deployed on the individual pension account of a limited set of eligible subscribers or any prospective subscribers or otherwise for a definite period of time, for furthering innovation in the pension sector, subject to such conditions as may be laid down by the Authority.
1.2 The term “Applicant” shall mean
a) a registered intermediary applying for participation in the Regulatory Sandbox, either independently or in association with any FinTech entity or any other entity incorporated or registered under applicable laws in India; or b) a non-registered entity, including a FinTech entity, incorporated or registered under the Companies Act, 2013 or Limited Liability Partnership (LLP) under the Limited Liability Partnership Act, 2008, applying independently in accordance with the eligibility and other terms and conditions specified under this framework.
1.3 The term “Test Solution” shall mean the proposed product, service, business model or delivery mechanism intended to be tested under the Regulatory Sandbox.
1.4 The term “User” shall mean a subscriber whose pension account is included in the Regulatory Sandbox testing environment and who has voluntarily consented to participate in the testing of the proposed solution after being informed of its objectives, risks, limitations, and testing conditions.
1.5 Words and expressions used and not defined herein shall have the same meaning as assigned to them under the PFRDA Act, 2013 and the regulations thereof.
2. OBJECTIVE AND SCOPE
2.1 The pension ecosystem in India is undergoing rapid transformation driven by advancements in financial technology, increasing digital adoption and emergence of innovative business models, products and service delivery mechanisms. Such innovations have the potential to enhance efficiency, subscriber protection, long-term sustainability, technology-enabled outreach, cost reduction, ease of onboarding, accessibility, transparency, pension adequacy, financial awareness and inclusiveness within the pension sector.
2.2 At the same time, such innovations may give rise to risks relating to subscriber protection, data privacy, cybersecurity, operational resilience and regulatory compliance. Accordingly, in order to facilitate responsible innovation while ensuring adequate safeguards for protection of subscribers’ interests and orderly development of the pension ecosystem, the Authority considers it necessary to provide a structured framework for controlled testing of innovative solutions.
2.3 The Regulatory Sandbox framework seeks to provide an enabling environment for regulated entities as well as non-regulated entities to test innovative products, services, business models and technology-driven solutions in a controlled regulatory environment with a limited set of subscribers and for a specified duration, subject to such terms, conditions and restrictions as may be laid down by the Authority.
2.4 The framework also aims to foster collaboration among regulated entities, FinTech entities, and other ecosystem participants for development of innovative and subscriber-centric solutions relevant to the pension sector. However, it may be noted that the Authority or its Regulatory Sandbox shall not be construed as a system to provide any legal waivers to the Applicant from the applicable laws.
3. APPLICABILITY
3.1 All entities registered with PFRDA under Section 27 of the PFRDA Act, 2013 or empaneled with PFRDA under the extant Regulations, shall be eligible for testing in the Regulatory Sandbox.
3.2 A registered intermediary may undertake testing either independently or in association with a FinTech entity or any other entity incorporated or registered under applicable laws in India, including companies under the Companies Act, 2013 or LLPs under the LLP Act, 2008. In all such cases, the registered intermediary shall be the principal applicant and shall remain solely responsible for the conduct of testing and compliance with all applicable requirements.
Provided that a non-registered entity, including a FinTech entity, incorporated or registered under the Companies Act, 2013 or Limited Liability Partnership (LLP) under the Limited Liability Partnership Act, 2008, shall be eligible to apply for the Regulatory Sandbox as an independent Applicant, subject to:-
a) it shall have a minimum audited net worth of ₹10 lakh, as on the last day of preceding financial year; and b) such independent participation is permitted only for innovations that do not handle subscriber contributions, funds, or sensitive Personal Identifiable Information (PII) and transactional data.
3.3 The accountability for all acts, omissions and outcomes arising from the testing shall vest with the applicant.
4. ELIGIBILITY CRITERIA
4.1 An applicant seeking participation in the Regulatory Sandbox shall demonstrate that the proposed Test Solution involves a genuine element of innovation and is capable of providing meaningful value addition to the pension ecosystem.
4.2 The applicant shall establish a bona fide requirement for conducting live testing and shall demonstrate that the objectives of the Test Solution cannot be effectively achieved without such testing in a controlled environment. Where any regulatory relaxation is sought, the applicant shall demonstrate that the proposed solution cannot be effectively tested without such relaxation.
4.3 The applicant shall conduct testing only on a limited and identified set of users, subject to the maximum number of users approved by the Authority. Participation of users shall be voluntary and based on their explicit informed consent. Such consent shall be obtained after providing adequate disclosure regarding the nature of the testing, the associated risks, limitations, and any potential impact arising from the use of the solution.
4.4 The proposed Test Solution shall offer identifiable and measurable benefits, whether direct or indirect, to subscribers, registered intermediaries or the pension system at large.
4.5 The applicant shall have in place an adequate and robust risk management framework, including appropriate safeguards to identify, assess and mitigate potential risks to subscribers and to the system arising from the testing of the solution.
4.6 The applicant shall demonstrate readiness to undertake testing, including the availability of necessary infrastructure, resources and a well-defined testing plan with clearly specified parameters, success criteria and monitoring mechanisms.
4.7 The applicant shall also specify a clear exit and transition strategy, including the proposed course of action upon completion or termination of testing and the manner in which subscribers shall be treated in such circumstances.