Employees and job holders in India retire around the ages of 50 to 65. So it is essential for early planning, investment, and contribution to secure your second innings of life. While life expectancy is increasing, the demand for the government pension scheme - NPS, is considerably rising.
Initially, the National Pension System was introduced only for government employees. But later on, the plan was revived and opened to all sections of the entire population. Presently, people between 18 to 60 years have the privilege to subscribe to and invest in NPS.
Investing in NPS works as a trusted long-term investment tool and a tax-saving retirement fund. The National Pension System offers you to invest in two types of accounts - Tier I and Tier II. While the prior NPS account is mandatory, the latter one acts as an additional or a voluntary account.
What is NPS Tier II Account?
After actively opening an NPS Tier I account, you will be eligible to open a Tier II account. While opening a Tier II account, you need to make a minimum investment of Rs. 1000. However, the later contributions to the Tier II account can be anything as per your desire.
So unlike a Tier I NPS account, you need not make any specific contribution. Nevertheless, it would be best if you make contributions to the Tier II account in the multiples of Rs. 250. Besides, there will be no prevailing cap on the maximum assistance to be made.
The NPS Tier II account provides fantastic withdrawal flexibility where there are zero exit load charges attached. However, the investments made towards the Tier II account are not exempted from tax.
The National Pension Scheme offers four asset classes to choose from while investing in your corpus. Government securities, equity instruments, corporate bonds, and alternative investment funds.
Steps to Open a Tier II NPS Account
You can open a Tier II NPS account both online and offline. However, we will provide you with a listed guide on how to open an NPS Tier II account online:
1. Firstly, you need to visit the website of KFintech - https://nps.kfintech.com/
2. Scroll to the option “Quick links."
3. Click on the option “Tier II Activation."
4. Next, fill in the required fields with the necessary details.
5. Click on “Verify PRAN", after which you will receive an OTP in your registered mobile number.
6. After punching in the OTP, fill in your bank details and click on the option “Validate Aadhaar."
7. Once you receive your acknowledgement number, click OK to continue.
8. You will have to select your desired investment option and a pension fund manager.
9. By clicking on the “Save and Proceed" option, you will be redirected to the next page.
10. Next, you will have to update your nominee details.
11. After this, you will have to upload scanned copies of all the required documents.
12. Once the documents are successfully uploaded, you need to proceed to make the payment.
13. After completing the payment of Rs. 1000, you will successfully open an NPS Tier II account.
14. Finally, you have to sign your application by using your Aadhaar number. And then, you are free to use your NPS Tier II account.
Why you should open an NPS Tier II account?
Opening an NPS Tier II account will require no additional maintenance charges. In other words, you can easily save your earnings and withdraw them whenever needed. Open an NPS Tier II account today itself, while there are zero minimum balance requirements.
Author: Sreekanth Nadella, MD and CEO, KFintech
