In a significant development aimed at providing more financial options to government sector subscribers, the Pension Fund Regulatory and Development Authority (PFRDA) has issued Circular No: PFRDA/2023/27/Sup-CRA/08 on September 22, 2023. This circular introduces the NPS Tier II Default Scheme, enhancing the investment avenues available under the National Pension System (NPS).
Background: The PFRDA is committed to expanding the investment avenues within the NPS framework. The latest move introduces the NPS Tier II Default Scheme, specifically tailored for government sector subscribers.
Additional Investment Option: Government sector subscribers under NPS will now have the option of the Default Scheme, in addition to the existing Scheme E, Scheme C, and Scheme G investment options.
Catering to Financial Aspirations: The NPS Tier II Default Scheme is a significant step forward in addressing the financial aspirations of government sector subscribers. It is designed to provide flexibility and convenience, aligning with the unique requirements of this subscriber group.
Continuity Across Sectors: Government sector subscribers can continue with the Default Scheme under Tier II even if they shift their accounts to another sector.
Key Benefits of NPS Tier II:
- Greater Flexibility: No mandatory annual contribution is required for Tier II. Subscribers can open the account with a minimum contribution and contribute any amount without a maximum limit.
- Easy Withdrawals: Tier II allows subscribers to withdraw money whenever needed, ensuring convenient access to savings.
- Seamless Transfer: Funds can be moved from Tier II to the primary pension account (Tier I) at any time, making investments adaptable.
- No Minimum Balance: There’s no obligation to maintain a minimum balance, giving complete freedom in contributions.
- Separate Nomination Facility: Subscribers can nominate beneficiaries for Tier II accounts if necessary.
- Default Investment Scheme: The Default Investment Scheme, similar to Tier I, is now extended to Tier II for government sector subscribers. This simplifies investment decisions.
- Easy Onboarding: Joining Tier II and opting for the Default Scheme is straightforward, requiring consent or a request through the CRA portal.
Activation Process: Government sector subscribers associated with Protean CRA can activate their accounts on the Protean e-NPS website. Existing Tier II subscribers can opt for the Default Scheme through the Scheme Preference Change option in their login. More than 700 subscribers have already chosen the Default Scheme in Tier II.
Expanding Availability: The availability of Tier II under the Default Choice will soon be extended to subscribers associated with KFin CRA.
Regulatory Authority: This circular is issued under Section 14(1) of the PFRDA Act, 2013, in accordance with Regulation 18 and 19 of the PFRDA (Central Recordkeeping Agency) Regulations, 2015.
Conclusion: The introduction of the NPS Tier II Default Scheme by the Pension Fund Regulatory and Development Authority marks a significant milestone in enhancing financial options for government sector subscribers. With increased flexibility, easy access to funds, and simplified investment choices, this scheme aligns with the diverse financial aspirations of this subscriber group. Government sector subscribers now have more control over their investments, making it easier to plan for a secure financial future. This move by PFRDA demonstrates its commitment to evolving and expanding the National Pension System to benefit 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