Every fiscal year, National Pension System (NPS) subscribers must contribute a minimum of Rs 1,000. The initial deposit is Rs 500. If the subscriber fails to make the required contribution, the account and PRAN (Permanent Retirement Account Number) become 'frozen.'. A subscriber must pay a minimum initial contribution of Rs 500 for Tier I and Rs 1000 for Tier II at the time of registration. There may be times when your NPS account is frozen due to non-contribution of funds. Here's how to reactivate a 'frozen' NPS account. To reactivate or unfreeze such an account, follow the steps below.
What is an NPS Account?
The National Pension System (NPS) is a voluntary, defined contribution retirement savings plan that enables subscribers to save for retirement by making systematic contributions throughout their working lives. The NPS aims to instil in citizens the habit of saving for retirement. It is an attempt to find a long-term solution to the issue of providing adequate retirement income to all Indian citizens.
Individual savings are pooled in a pension fund and invested in diversified portfolios of Government Bonds, Bills, Corporate Debentures, and Shares by PFRDA-regulated professional fund managers in accordance with approved investment guidelines. These contributions would grow and accumulate over time, based on the returns on the investment.
Subscribers may use the accumulated pension wealth under the scheme to purchase a life annuity from a PFRDA-empanelled Life Insurance Company at the time of normal exit from the scheme, in addition to withdrawing a portion of the accumulated pension wealth as a lump sum if they choose.
How to reactivate an NPS account?
A subscriber must make a minimum yearly payment of Rs.6,000 to his Tier I account in a fiscal year, or the account will be locked. To unfreeze the account, the customer must pay the sum of the minimum contributions made during the freeze period, the minimum contribution for the year the account is reactivated, and a Rs 100 penalty. To unfreeze an account, the subscriber must visit a Point of Presence (POP) and pay the applicable fees.
Contributions to eNPS accounts can be made online. The NPS will be reactivated if a minimum payment of Rs 500 is made within a fiscal year. Contributions to unfreeze the account can be made at any POP-SP (point of purchase service provider) or online through eNPS.
Unfreezing Tier 1/Tier 2 or both accounts incurs a Rs 100 penalty. Subscribers to Swavalamban will be charged a Rs.25 penalty. The following is the deposit amount required to unfreeze the account:
Regular accounts: Rs.500/- for the current fiscal year, plus a Rs.100/- penalty for the year(s) of freezing. The CRA system will reject the contribution during the upload process if it is less than the minimum expected amount.
When PRAN is frozen or inactive, NPS is withdrawn
The withdrawal will be processed normally, but the penalty for unfreezing such an account without the subscriber seeking to reactivate the account or paying the necessary amounts to activate the account will be deducted." Essentially, the CRA will unfreeze the account and process the withdrawal claim, charging the appropriate penalty.