The government provides a National Pension Scheme or NPS Tier-II account to the subscribers. It works like a regular bank account and does not have mandatory withdrawal rules or a fixed interest rate. To open an online account, you need to visit the ENPS website, click on ‘Tier-II Activation’, enter the details on the next page and verify it. If you are opening a Tier-II account offline, use ‘Subscriber’s POP-SP’, download the form, fill it with your bank details and submit.
Features of NPS Tier-II Account: An NPS Tier-II account holder enjoys the benefit of flexibility, which means that the subscriber is free to choose any NPS investment option. They can also shift from one investment option to another. There is no restriction on the withdrawal of funds deposited in the NPS Tier II account, and the risks involved are weighed, and you can then choose a suitable asset allocation pattern.
Ajit Kumar, CSO, Cfintech, said, “The NPS Tier-II account has low management cost and is easy to access, and professionals invest all funds as per approved guidelines, and it is a hassle free process for you. An individual can also increase or decrease the contribution annually, half-yearly, quarterly or monthly and can deposit money in Tier-II account through cheque, cash or demand draft.
Required Documents: For opening NPS Tier-II account only PRAN card is required as you must have already submitted KYC documents while opening Tier-I account. You must have the duly filled registration form, identity proof, address proof and age proof.
Investment Required: No minimum annual contribution is required in NPS Tier-II account. Minimum starting amount should be 1000, and you do not need any maximum investment for this account.
Tax Savings: Unlike the NPS Tier-I account, the NPS Tier-II account does not offer tax exemption as the funds are not locked in for a specific period. “However, you can claim tax on NPS Tier-II accounts having lock-in period in FY 2020-21,” Kumar said.
Withdrawal Process: “In order to withdraw your funds from NPS Tier-II account, you need to fill in the required details and submit the UOS-S12 form for withdrawal along with relevant documents. Funds are transferred to the customer’s account within a maximum of 3 working days. There is no requirement of compulsory annuity on money in NPS Tier-II account. Subscriber can withdraw money without penalty fee.
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