The Pension Fund Regulatory and Development Authority (PFRDA) has introduced the NPS Tier II Default Scheme exclusively for Government Sector subscribers. This new scheme offers an additional investment option to Government sector subscribers alongside the existing Scheme E/Scheme C/Scheme G investment options in NPS Tier II.
The NPS Tier II Default Scheme has been designed to provide flexibility and convenience, catering to the unique requirements of Government sector subscribers.
In a circular dated September 22, 2023, PFRDA specified that Government Sector Subscribers can continue with the Default Scheme under Tier II even when they switch their account to another sector.
Here are some benefits of the NPS Tier II account as per the circular:
- Greater Flexibility: There is no mandatory annual contribution requirement for Tier II, allowing subscribers to open the account with a minimum contribution. There is no maximum limit on the amount that can be contributed under Tier II.
- Easy Withdrawals: Tier II account holders can withdraw funds at any time, providing a convenient way to access savings when needed.
- Seamless Transfer: Subscribers can transfer their funds to the primary pension account (Tier I) at any point. 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 the freedom to contribute as desired.
- Separate Nomination Facility: Subscribers have the option to 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 simplifies the investment process, similar to Tier I, without requiring active selection of investment schemes or PFs.
- Easy Onboarding: To join Tier II and opt for the Default Scheme, Subscribers need to provide consent or a request to the CRA through the associated nodal office. The CRA portal offers online and electronic modes of consent for Subscribers’ convenience.
For Government Sector Subscribers associated with Protean CRA, the account activation process for NPS Tier II can be completed on the Protean e-NPS website. If a subscriber already has Tier II and wishes to opt for the default scheme in Tier II, they can do so through the Scheme Preference Change option available in their login. The facility of Tier II under the default choice will soon be made available to subscribers associated with KFin CRA as well.
