How do you open an NPS tier-II account?

The government offers subscribers an National Pension Scheme or NPS tier-II account. It works like a regular bank account and does not have mandatory withdrawal rules or a fixed interest rate. To open an online account, you must visit the eNPS website, click on ‘Tier-II Activation’, enter details on the next page, and verify it. If you are opening a tier-II account offline, use the ‘Subscriber’s POP-SP’, download the form, fill it with your bank details and submit it.

Features of NPS tier-II account: An NPS tier-II account holder has the advantage of flexibility, which means subscribers are free to choose any NPS investment options. They can even shift from one investment choice to another. There is no restriction on the withdrawal of funds deposited in the NPS tier II account, and it weighs the risks involved, and then you can pick a suitable asset allocation pattern.

Ajit Kumar, CSO, KFintech, said, “The NPS tier-II account has a low management cost and is easy to access, and professionals invest all funds as per approved guidelines, and it is a hassle-free process for you. One can deposit money yearly, half-yearly, quarterly or monthly as well as increase or decrease the contribution and deposit money in a tier-II account through cheque, cash or demand draft.”

Documents required: PRAN Card is the only requirement to open an NPS tier-II account because you would have already submitted the KYC documents while opening a Tier-I account. You must have a duly filled registration form, identity proof, address proof and age proof.

Investment required: NPS tier-II account does not require any minimum annual contribution. The minimum initial amount must be ₹1000, and you don’t need any maximum investment for this account.

Tax savings: Unlike the NPS tier-I account, the NPS tier-II account does not give a tax rebate because the funds are not locked for a specific period. “However, you can claim tax on NPS tier-II accounts with a lock-in period, in FY 2020-21,” added Kumar.

Withdrawal procedure: “To withdraw your funds from the NPS tier-II account, you must fill in necessary details and submit the UOS-S12 form for withdrawal along with relevant documents. The funds get transferred to the subscriber’s account in a maximum of 3 working days. There is no necessity for mandatory annuitisation on money in the NPS tier-II account. The subscriber can withdraw money without paying a penalty fee,” said Kumar.