Under the National Pension System exists two sub-accounts, NPS Tier I and Tier II. While NPS Tier-I is a basic retirement account, the Tier-II account can be maintained voluntarily by the NPS subscriber.
The NPS Tier-II account is similar to a mutual fund that is being managed by 7 pension fund houses. The account comes with no lock-in period until retirement. This said money from it can be withdrawn at any time without any limitations or conditions. So, it can be compared to an investment account that given the current scenario of low interest rate on savings bank account fetches better returns as well as high liquidity.
You can open the NPS Tier-II account in either of the ways:
Any Indian citizen whether resident or non-resident can join the NPS scheme and open the NPS Tier-II account. Individual should be aged between 28 and 60 years when making the application for NPS.
Active NPS Tier-I account is another pre-requisite for maintaining Tier-II account
Also, the account should be opened under the same PRAN or Permanent Retirement Account Number as the NPS Tier-I account.
Documents required for opening Tier-II account
With an active Tier-I account, you shall be able to make an application for Tier-II account by just providing the PRAN card.
Visit POP Service Providers (POP-SP) which are designated by PFRDA for providing services under NPS for the Tier-II account form or the same can be downloaded online.
Almost all of the financial institutions including banks, insurer and other financial services companies are now enrolled as POPs or Points of Presence of PFRDA.
Provide PAN, bank details and nomination. Then submit the duly completed form to the POP-SP for the activation of Tier-II account.
In case you are making a fresh application for NPS scheme, both the tier-I and tier-iI account can be opened at one go using the composite form.
Click on the link https://enps.nsdl.com/eNPS/NationalPensionSystem.html. Under it, you can choose the option to activate Tier-II account. Provide all the requisite details including PRAN, PAN and DOB for activation. Upon verification of the provided PRAN, your tier-II account will be activated.
Select scheme details
The subscriber needs to opt for the NPS scheme in respect of the allocation of funds towards tier-II account. A maximum contribution to equity allowed is upto 50%.