National Pension Scheme (NPS) (Tier-I account) that accumulates retirement corpus for you requires you to contribute a minimum of Rs. 6000 on an annual basis. The sum can also be contributed in installments, nonetheless it shall entail a higher cost. The long-term retirement product has to be locked in until the age of 60 years i.e your contribution towards the account shall remain invested in the scheme until 60 years of age. And only at the age of 60 years, you are allowed to withdraw 60% of the corpus amount, however you need to open an annuity account with 40% of the remaining corpus that pays you a regular sum during your sunset years.

The NPS scheme that is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) has to be strictly complied in terms of contribution. As in case if you miss on the contribution towards the account in any of the year, the authority holds the right to freeze the account. And, without making the mandatory minimum contribution for the relevant year in which the NPS contribution has been skipped you shall not be able to transact in the account. Further, a penalty of Rs. 100 for each of the year in which the contribution has been missed is also to be paid.

The money in the scheme shall remain invested until the fund value of the investment does not reaches 0. On, reaching this level, the NPS account shall be closed and the subscriber needs to reactivate it.

In case of the Tier-II NPS account that is flexible in contrast to Tier-I retirement account, non-maintenance of the otherwise mandatory minimum sum of Rs. 2000 on an annual basis attracts a penalty of Rs. 100/ year. Also, in the case if contribution to the Tier-II account is not made for any year, penalty of Rs. 100 has to be paid.

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