Now, savings account available with NPS

The Pension Fund and Regulatory Development Authority has unveiled a savings account scheme under the New Pension Scheme which would allow investors to enter and exit at will.

The account, called Tier-II, will be available only to those who have subscribed to Tier-I, which an investor cannot exit till the age of 60. Tier-I, a pension account, was launched in May but has not found too many subscribers in the absence of tax benefits at the time of withdrawal.

The scheme attracted 2,775 subscribers till November 27, according to data available on the PFRDA website. Employees who joined the government after January 1, 2004, would also be eligible to open the savings account.

While a subscriber can open a Tier-II account through a point of presence, or the pay office in case of government employees, the minimum contribution at the time of opening an account has been fixed at Rs 1,000. Subsequently, a subscriber can put in Rs 250 or more on four occasions. A minimum balance of Rs 2,000 will have to be maintained at the end of the financial year, though investors can transfer funds from the savings to the pension account, according to the PFRDA.

While no account opening or maintenance charge would be levied by the central recordkeeping agency, the point of presence, which could be a bank or another appointed agency, would charge Rs 20 for activation of the Tier-II account.

Those opting for a Tier-II account would have to select their fund manager from the list of six pension fund managers appointed by the PFRDA. Investment options, including auto choice where the investment pattern is linked to the age, would be available.