The New Pension System’s Tier II account has now been made available to the subscribers.
The NPS Tier I where one can contribute savings for retirement into a non-withdrawable account had been made available to subscribers on May 1 this. The Tier II in which one can withdraw anytime, has been made available with effect from December 1, 2009.
According to the Offer document of Pension Fund Regulatory and Development Authority, only an active Tier I account holder will be eligible for opening an Tier II account.
The Tier II would enable the existing Permanent Retirement Account (PRA) holder to build savings through investments over and above those in the Tier I pension account. While Tier I aims at providing a window of liquidity to NPS subscribers, the Tier II is aimed to meet financial contingencies. In Tier II, there would be no limits to withdrawals.
For Tier II, the Minimum contribution at the time of account opening is Rs 1,000 while the minimum amount per contribution will be Rs 250. Minimum account balance at the end of the financial year should be Rs 2,000 while the minimum number of contributions in a year would be four. (Minimum one contribution if the subscriber joins in the last quarter). While having a bank account is not mandatory in Tier I, it the vice versa in Tier II.