To give a boost to the National Pension System (NPS), the pension regulator has slashed the mandatory minimum annual contribution from ₹6,000 to ₹1,000.
“To encourage access of NPS to all segments of the society, including the unorganised sector, it has been decided to reduce the requirement of minimum contribution to keep the NPS Tier I account active,” said the Pension Fund Regulatory and Development Authority (PFRDA) in a circular, adding that the facility is available for the NPS for all citizens and corporates.
Under the earlier guidelines, the Tier I, or pension the account, of an NPS subscriber would be frozen if the minimum annual contribution was not made nor would he/she be able to make further contributions or view the account balance online.
The PFRDA has also relaxed norms for the Tier II, or savings account, under the NPS and waived the requirements of a minimum annual contribution of ₹250 and a balance of ₹2,000 at the end of a fiscal.
“As the NPS Tier II account is a savings account having features of high liquidity and capacity to earn higher returns, this would propagate the Tier II account amongst subscribers of all sectors and provide easy and hassle-free operation,” it said.
As a one-time measure, the PFRDA has also announced “unfreezing” of all accounts (Tier I and Tier II) that were frozen due to non-contribution of the minimum amount or had lower-than the mandated account balance.
The NPS had nearly 99.95 lakh subscribers as on July 30 with assets under management of over ₹1.34-lakh crore. However, a large part of the subscriber base and the contributions come from the NPS for Central/State government employees.
The NPS for the corporate sector has 5.04 lakh subscribers while there are just 2.45 lakh members from the unorganised sector.