Tier-2 account makes NPS dynamic

April 07, 2010 04:03 pm | Updated 04:03 pm IST - MANGALORE:

To make the New Pension System (NPS) dynamic, Pension Fund Regulatory and Development Authority (PFRDA) has introduced the concept of Tier-2 account. This is to provide for withdrawals to meet financial contingencies.

According PFRDA consultant Kavim V. Bhatnagar, opening the Tier-1 account is compulsory for everyone opting for NPS. However, the Tier-2 account is optional for the investors, as it is a voluntary savings account from which the investor can withdraw money, any time and any number of times.

Flexibility

The Tier-2 enables people build savings through investments over and above those in the Tier 1 pension account. Only those having an active Tier 1 account can open the Tier 2 account. They can be opened simultaneously as well, according to Mr. Bhatnagar.

The Central Record-keeping Agency (CRA) will not levy additional maintenance charges on the Tier 2 accounts, other than the nominal Rs. 10 for each transaction, as is the case with Tier 1 account. Investors can choose separate fund managers, separate pattern of investment and appoint separate set of nominees. They can transfer money from Tier 2 to Tier 1 account too.

Minimum amount for opening Tier 2 account is Rs. 1,000. Minimum remittance is Rs. 250 and minimum balance at the end of a financial year is Rs. 2,000. Minimum number of contributions in a year is four. The Tier 2 savings can be added to pension corpus at the time of retirement to increase monthly pension.

0 / 0
Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in

Comments

Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.