The Pension Fund Regulatory and Development Authority (PFRDA) has introduced the NPS Tier II Default Scheme exclusively for Government Sector subscribers. This new scheme provides Government sector subscribers with an additional investment option alongside the existing Scheme E/Scheme C/Scheme G investment options.
The NPS Tier II Default Scheme is tailored to offer flexibility and convenience, aligning with the specific needs of Government sector subscribers.
As per a circular dated September 22, 2023, PFRDA outlined the benefits of the NPS Tier II account:
Greater Flexibility: Tier II does not require a mandatory annual contribution. Subscribers can open the account by making the minimum contribution, and there is no maximum limit on the amount that can be contributed.
Easy Withdrawals: Subscribers with a Tier II account can withdraw funds at any time, providing a convenient means to access savings when needed.
Seamless Transfer: Subscribers can easily move funds to their primary pension account (Tier I) whenever they wish. This feature ensures that investments remain adaptable to changing needs.
No Minimum Balance: There is no obligation to maintain a minimum balance in the NPS Tier II account, offering complete freedom regarding contributions.
Separate Nomination Facility: Subscribers can nominate beneficiaries for Tier II accounts separately if required.
Default Investment Scheme: The Default Investment Scheme available in Tier I has been extended to Tier II accounts for Government Sector Subscribers. This allows subscribers access to a simplified default investment scheme, similar to Tier I, without the need to actively select a scheme of investment or PFs.
Easy Onboarding: To activate Tier II and opt for the Default Scheme, subscribers need to provide consent or make a request through the associated nodal office. The CRA portal offers online and electronic modes of consent for the convenience of subscribers.
For Government Sector Subscribers associated with Protean CRA, the account activation process can be completed on the Protean e-NPS website. Subscribers who already have Tier II accounts and wish to opt for the default scheme in Tier II can do so through the Scheme Preference Change option available in their login. More than 700 subscribers have already chosen the default scheme in Tier II, and this facility will soon be extended to subscribers associated with KFin CRA.
