In a major move to ease flow of contributions from National Pension System (NPS) subscribers, the Pension Fund Regulatory and Development Authority (PFRDA) has decided to slashes the minimum annual contribution under Tier-I account from Rs 6,000 to Rs 1,000.
For Tier-II accounts, PFRDA has decided to waive the requirement of maintining minmum balance of Rs 2,000 at the end of the financal year and having at least Rs 250 per year.
Earlier, the minimum contribution of Rs 6,000 was required per financial year for keeping NPS Tier-I account in ‘active’ status. If the limit of investment was not met during the financial year, the account would get frozen and the subscriber was not able to make any further contribution. The subscriber was also not able to view his account online or make any request for making any changes in the perosnal details before unfreezing the account.
Similarly, for NPS Tier-II account the minimum contrinution for a financial year to keep the account active was Rs 250 and the balance at the end of the financial year in Tier-II was requred to be Rs 2,000.
Tier-II is like a savings account providing liqudity along with the potential to earn highe returns.
According to PFRDA, as a one-time measure all accounts under Tier-I and Tier-II that have been frozen in the past due to non-contribution of minium contribution and minimum balance requirements would be unfrozen. All subscribers can now make contribution to their NPS account in a noraml way
However, in a release, the pension regulator has advised subscribers to make the maximum contribution possible to NPS for a decent income after retirement. “Even though the minimum balance requirement has been reduced subscribers are advised to contribute to their Permanent Retirement Account Number (PRAN) account as much as possibkle to get a decent pension and live a dignified life post retirement,” PFRDA has said.
