Pension Fund Regulatory and Development Authority (PFRDA) has taken a significant step towards enhancing investment opportunities for Government Sector Subscribers under the National Pension System (NPS). In Circular No: PFRDA/2023/27/Sup-CRA/08, dated September 22, 2023, PFRDA introduces the NPS Tier II Default Scheme exclusively for Government Sector Subscribers.
Detailed Analysis
Enhanced Investment Options: Government Sector Subscribers under NPS now have an additional investment option known as the NPS Tier II Default Scheme. This scheme complements the existing investment options, including Scheme E, Scheme C, and Scheme G.
Catering to Financial Aspirations: The NPS Tier II Default Scheme is a significant move towards addressing the diverse financial aspirations of Government Sector Subscribers. It has been meticulously designed to provide flexibility and convenience, aligning with the unique requirements of this sector.
Continued Access: Government Sector Subscribers can continue using the Default Scheme under Tier II even after transferring their accounts to another sector. This ensures uninterrupted investment opportunities.
Key Benefits:
- Greater Flexibility: No mandatory annual contribution requirement for Tier II, with no maximum limit on contributions.
- Easy Withdrawals: Subscribers can withdraw funds at any time, ensuring accessibility when needed.
- Seamless Transfer: Funds can be transferred to the primary pension account (Tier I) at any point, ensuring adaptability.
- No Minimum Balance: No requirement to maintain a minimum balance, providing complete freedom in contributions.
- Separate Nomination: Subscribers can nominate beneficiaries for Tier II accounts if necessary.
- Default Investment Scheme: Similar to Tier I, Tier II now offers a simplified default investment scheme without the need for active selection.
- Easy Onboarding: Joining Tier II and opting for the Default Scheme is hassle-free, with online and electronic consent options.
Account Activation: Government Sector Subscribers associated with Protean CRA can activate their accounts on the Protean e-NPS website. Those who already have Tier II accounts can easily opt for the default scheme through the Scheme Preference Change option.
Expanding Availability: The Tier II Default Choice will soon be available for subscribers associated with KFin CRA, widening its accessibility.
Legal Framework: This circular is issued under Section 14 (1) of the PFRDA Act, 2013, in conjunction with Regulation 18 and 19 of the PFRDA (Central Recordkeeping Agency) Regulations, 2015.
Conclusion
The introduction of the NPS Tier II Default Scheme exclusively for Government Sector Subscribers by the PFRDA signifies a commitment to providing diversified investment opportunities. This scheme’s flexibility, accessibility, and seamless integration into the NPS framework make it a valuable addition for subscribers in the government sector. With its user-friendly features and legal backing, the Default Scheme aims to enhance the financial well-being of Government Sector Subscribers within the NPS framework. Stay tuned for further updates and the widening availability of this scheme for all subscribers.
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Pension Fund Regulatory and Development Authority
Circular No: PFRDA/2023/27/Sup-CRA/08 Dated: 22nd Sep 2023
To
All NPS Stake Holders and Govt sector subscribers
Subject: NPS Tier II through Default scheme for Government Sector Subscribers-reg
As part of PFRDA’s ongoing commitment to provide enhanced investment avenues under NPS, it has been decided to introduce the NPS Tier II Default Scheme exclusively for Government Sector Subscribers.
2. Government Sector Subscribers under NPS will be given additional investment option of Default Scheme along with the existing Scheme E / Scheme C / Scheme G investment options.
3. The NPS Tier II Default Scheme represents a significant step forward in catering to the diverse financial aspirations of the Government Sector Subscribers. This scheme is designed to offer flexibility and convenience, aligning with the unique requirements of the Subscribers under the Government sector.
4. Government Sector Subscribers may continue with the Default Scheme under Tier II even after their shifting account to another sector also.
5. The key benefits of an NPS Tier II account:
a. Greater Flexibility: There is no mandatory annual contribution requirement for Tier II. The Subscriber can open the account by paying the minimum contribution. There is no maximum limit on the amount that can be contributed under Tier II.
b. Easy Withdrawals: With a Tier II account, subscribers can withdraw money at any point of time. It’s a convenient way to access the savings when subscribers may need them the most.
c. Seamless Transfer: If subscriber wishes to move the funds to primary pension account (Tier I), it can be done at any point. This feature ensures that the investments remain dynamic and adaptable to your changing needs.
d. No Minimum Balance: There is no requirement for maintaining a minimum balance in NPS Tier II account. It offers the freedom to contribute as much or as little as one wants.
e. Separate Nomination Facility: The Subscribers can nominate beneficiaries for Tier II account separately, if required.
f. Default Investment Scheme: The facility of the Default Investment Scheme of Tier I has been extended to Tier II accounts for Government Sector Subscribers. This facilitates the Subscribers to have access to a simplified default investment scheme, similar to Tier I, without the need for actively choosing a scheme of investment or PFs.
g. Easy to onboard: To join Tier II and opt for the Default Scheme, the Subscribers need to provide consent or a request to the CRA through the associated nodal office. The online & electronic modes of consent mode available on the CRA portal for the benefit of Subscribers.
6. Government Sector Subscribers associated with Protean CRA can complete the account activation process on Protean e-NPS website. If any subscriber is already having Tier II and wish to opt for default scheme in Tier II, one can do the same through Scheme Preference Change option available in the login of subscriber. More than 700 subscribers have already opted for default scheme in Tier II.
The facility of Tier II under default choice will also be made available soon for subscribers associated with KFin CRA.
7. This circular is issued under Section 14 (1) of PFRDA Act,2013 read with Regulation 18 and 19 of the PFRDA (Central Recordkeeping Agency) Regulations, 2015.
Yours Sincerely,
Chief General Manager
