The Pension Fund Regulatory And Development Authority (PFRDA) has introduced a new offering within the National Pension System (NPS), known as the NPS Tier II Default Scheme, catering specifically to government sector subscribers. This initiative reflects PFRDA’s ongoing commitment to expanding investment opportunities within NPS.
The NPS Tier II Default Scheme introduces an additional investment option, allowing government sector subscribers to diversify their investments alongside the existing Scheme E, Scheme C, and Scheme G options.
Seven Key Benefits of the NPS Tier II Default Scheme:
- Greater Flexibility: Unlike Tier I, Tier II does not mandate an annual contribution requirement. Subscribers can open the account by making the minimum contribution without a maximum limit on the amount they can invest.
- Easy Withdrawals: Tier II permits subscribers to withdraw funds at their convenience, providing easy access to savings when needed.
- Seamless Transfer: Funds from Tier II can be effortlessly moved to the primary pension account (Tier I) whenever required. This feature ensures investments remain adaptable to changing financial needs.
- No Minimum Balance: There is no obligation to maintain a minimum balance in the NPS Tier II account, offering subscribers the freedom to contribute as per their preferences.
- Separate Nomination Facility: Subscribers can nominate beneficiaries for Tier II accounts independently if desired.
- Default Investment Scheme: The Default Investment Scheme available in Tier I has been extended to Tier II for Government Sector Subscribers. This simplifies the investment process, allowing subscribers access to a default scheme without needing to actively select an investment or PFs.
- Ease of Onboarding: To enroll in Tier II and opt for the Default Scheme, subscribers need to provide consent or a request to the CRA (Central Recordkeeping Agency) through the associated nodal office. Online and electronic modes of consent are available on the CRA portal for added convenience.
PFRDA has informed that government sector subscribers linked with the Protean CRA (Central Recordkeeping Agency) can activate their accounts on the Protean e-NPS website. Existing Tier II account holders looking to switch to the default scheme can do so through the Scheme Preference Change option available on the subscriber’s login. To date, over 700 subscribers have already chosen the default scheme in Tier II.
The availability of Tier II under the default choice will soon be extended to subscribers associated with KFin CRA.
With the introduction of the NPS Tier II Default Scheme, government sector subscribers have access to a more flexible and convenient investment avenue to secure their financial future.
