What is Tier II NPS?

National Pension System (NPS) has two types of accounts called Tier I and Tier II. It is mandatory to have a Tier I account in order to open a Tier II account.

What is the major difference between a Tier I and Tier II Account?

The single major difference between a Tier I and Tier II is that the balance from a Tier II Account can be withdrawn by the investor at any time. The minimum balance to keep the account operative is Rs.. 2,000. At the end of a financial year, any balance above that can be withdrawn.

Both Tier I and Tier II are pension products, i.e., they are meant to creat a lumpsum at retirement.

What are the charges for a Tier II Account?

No additional Central Record Keeping Agency (CRA) charges for Tier II, for either account opening or annual maintenance, are required. However, transaction charges same as Tier I will be applicable. The charges for Tier | have been provided below.

Is there a limit on the number of withdrawals?

No.

Would the scheme preference and nominee be the same as a Tier I account?

No, a separate nomination and scheme preference can be availed.

Can I transfer funds from Tier II to Tier I and vice-versa?

Only one way transfer from Tier II to Tier I is allowed, Transfer from Tier I to Tier II is not allowed since Tier I is non withdrawable.

What are the minimum contributions for a Tier II Account?

Minimum contribution at the time of account opening – Rs. 1,000
Minimum amount for subsequent contributions – Rs. 250
Minimum Account Balance at the end of Financial Year – Rs. 2,000
Minimum Contributions per year – 4 ( Minimum 1 contribution if you join in the last quarter)
Penalty of Rs. 100 for non maintenance of minimum balance and/or not making minimum no of contributions

What is the difference between a Tier I and Tier II Account?

• When the number of accounts in CRA reaches 10 Lakh the service charges, exclusive of Service Tax and other taxes as applicable will be reduced to Rs. 280 (Rupees two hundred and eighty only) for annual PRA maintenance per account and Rs. 6 (Rupees six only) for charges per transaction. Further, When the number of accounts in CRA reaches 30 lakh the service charges, exclusive of Service Tax and other taxes as applicable will be reduced further to Rs. 250 (Rupees two hundred and fifty only) for annual PRA maintenance per account and Rs. 4 (Rupees four only) for charges per transaction CRA charge for maintenance of your permanent retirement would include charges for maintenance of your permanent retirement would include charges for maintenance of electronic information of the balances in your PRA, for incorporating changes to PRA details received by the CRA in electronic form, for sending annual account information once a year in printed form etc.
• These include
  • Regular subscribers contribution
  • Change in subscriber details
  • Change of investment scheme / fund manager
  • Processing of withdrawal request
  • Processing of request for subscriber shifting
  • Issuarce of printed Account statement
  • Any other subscriber services a smay be prescribed by PFRDA
• The Investment Management Fee is inclusive of all transaction related charges usch as brokerage, transaction cost etc. except custodian charges and applicable taxes. The investment Management Fee is calculated on the average monthly assets managed by the pension fund
• Trustee Bank charges are not charged to subscriber directly. Transaction refers to the entire chain of activites starting from receipt of electronic instruction / receipt of physical instrument to transfer of funds to the designated PFMS. On the outflow side it would all activities leading to credit of beneficiary account
• Charges for Demat / Remat, Receipt of shares & SEBI charges are extra

What is the asset allocation pattern for my investments?

You have 2 choices:

• Auto choice (which does the asset allocation based on age) - The asset allocation based on age for auto choice is:
  
  

  Asset Class Age E C G Upto 35 Years 50% 30% 20% 36 Years 48% 29% 23% 37 Years 46% 28% 26% 38 Years 44% 27% 29% 39 Years 42% 26% 32% 40 Years 40% 25% 35% 41 Years 38% 24% 38% 42 Years 36% 23% 41% 43 Years 34% 22% 44% 44 Years 32% 21% 47% 45 Years 30% 20% 50% 46 Years 28% 19% 53% 47 Years 26% 18% 56% 48 Years 24% 17% 59% 49 Years 22% 16% 62% 50 Years 20% 15% 65% 51 Years 18% 14% 68% 52 Years 16% 13% 71% 53 Years 14% 12% 74% 54 Years 12% 11% 77% 55 Years and above 10% 10% 80%

  
  
• Active choice in which you choose between Equity (E),Corporate Bonds (C) and Governemnt Bonds (G) as per your choice subject to a maximum of 50% in equity such that the total 100% is allocated as per your choice.
  To give an example
  Equity (E)-between 0-50%, depending on this the rest could be in Corp Bonds or Govt Bonds so that total adds up to 100%, the only rule si that the equity portion can not exceed 50%.

Yes, the same can be done once every financial year.