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Business News/ Money / Personal Finance/  How to reactivate your frozen NPS account — A step by step guide
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How to reactivate your frozen NPS account — A step by step guide

Failing to meet the minimum annual contribution can result in the freezing of your NPS account. However, the reactivation process may vary depending on the specific reason for the freeze.

Failure to deposit the minimum required amount within a year may result in the freezing or deactivation of your NPS account.Premium
Failure to deposit the minimum required amount within a year may result in the freezing or deactivation of your NPS account.

The National Pension System (NPS) stands as a valuable asset in financial planning, particularly for retirement purposes. Despite its substantial advantages, private sector individuals, unlike government employees, are required to opt for participation and personally handle their contributions. Nevertheless, a notable distinction exists in contribution limits for government and private sector employees. 

Government employees have the flexibility to contribute up to 14% of their basic salary, whereas private sector employees are constrained to a limit of 10%. Furthermore, the prevalence of employer contributions is higher among government employees in comparison to their private sector counterparts.

For those unfamiliar with it, the NPS allocates your contributions across a combination of market-linked instruments (equity) and debt instruments, providing a balance between growth potential and stability. You can customize your asset allocation according to your risk tolerance and investment timeframe. There are two categories of NPS accounts: Tier-1 and Tier-2, each designed for specific purposes with distinct features. Tier-1 functions as a primary retirement account, whereas Tier-2 is ideal for individuals looking to save voluntarily.

Has your NPS account been frozen?

Errors may result in the potential freezing of NPS accounts. It is essential to identify the types of mistakes that can lead to deactivated NPS accounts before delving into the reactivation process. The common errors that lead to the freezing of NPS accounts include:

  • Failure to make the minimum yearly contributions can result in the freezing of the NPS account. 
  • Incomplete or inaccurate KYC documentation, specifically problems with identity and address verification, may also lead to account freezing.
  • Unauthorized transactions, such as attempting unauthorized withdrawals or contributions, can initiate a freeze on the account.
  •  In rare instances, technical errors associated with contributions or account updates may also lead to the freezing of the account.

Process for reactivating an NPS account

Understanding the cause of deactivation is crucial for the reactivation of a frozen NPS account. This can be accomplished either online through eNPS or offline at a Point of Presence (PoP). You will need to follow simple steps including

  • To unfreeze an account, you must complete the UOS-S10-A form. You can obtain this form from the post office. You may also acquire this form from the location where your NPS account is operational.
  • Attach a copy of the subscriber's PRAN card along with the form. Additionally, the subscriber needs to deposit the outstanding annual contribution in the account and pay a penalty of 100.
  • On submission of the application, NPS officials verify your account. Subsequently, your application undergoes processing, and the PRAN is activated.

For KYC discrepancies, provide the missing or corrected KYC documents to your PoP. First, reach out to the NPS Central Recordkeeping Agency (CRA) to address and resolve the matter. In case of a technical error, contact the NPS CRA for support in rectifying the issue.

The reactivation procedure typically takes five to seven working days. However, if the error involves financial misconduct, the reactivation process may be more intricate and necessitate additional steps. It is essential to take proactive measures and address the issue promptly upon discovery to prevent further complications.

 

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Published: 16 Feb 2024, 12:07 PM IST
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