When it comes to retirement investment, National Pension Scheme (NPS) is one of the most popular choices among people. It is a government-sponsored pension scheme which was launched in January 2004 for government employees. However, it was opened to all sections in 2009.
An NPS subscriber can contribute regularly in a pension account during their working life, withdraw a part of the corpus in a lump sum and use the remaining corpus to buy an annuity to secure a regular income after retirement.
This scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA). All Indian citizens between the age of 18-65 years can open an NPS account. NRIs can also open an NPS account. There are two types of account in NPS – Tier I account and Tier II account. A subscriber who wishes to exist from NPS has to submit a withdrawal application with all the documents required.
Tier-I The money can only be withdrawn if the exit condition prescribed under NPS are met.
Tier-II: Subscribers can withdraw their savings whenever they wish to.
As per PFRDA guidelines, every subscriber has to make a minimum contribution to their NPS account, every financial year in order to keep the account active. In case the subscriber fails to make such minimum contribution, the account gets frozen i.e., no further transactions would be allowed in the account. Frozen accounts can be unfrozen.
Tier I account minimum contribution: Subscribers are required to make at least one contribution in a financial year. The minimum contribution amount for Tier I account is Rs 500. This requirement, however, does not apply to Government or Corporate subscribers. A minimum contribution of Rs 1,000 in each financial year is required in order to avoid getting the account frozen.
Tier II account minimum contribution: Tier II account is a voluntary contribution account. There is no minimum contribution requirement for this account. However, if a Tier I account for a Permanent Retirement Account Number (PRAN) is frozen, the Tier II account is also kept in ‘Freeze’ status.
Here’s how to unfreeze NPS account
In order to unfreeze the account, the subscriber needs to submit a duly filled request as per the format provided by PFRDA to the associated POP-SP. Along with the request they have to also provide a copy of the PRAN card. The subscriber has to make a payment of the minimum contribution of Rs 500 along with a penalty of Rs 100 for the number of years of the freeze. This penalty is applicable to unfreeze Tier 1 or Tier 2 or both accounts……….Read More>>