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Investment in NPS Account

National Pension System provides the subscriber ease and flexibility to invest as per wishes as pension as well as investment under following types of accounts :

Tier 1 Account

PFRDA started the scheme with Tier 1 Account as the Pension Account. The investments made in the account are subject to withdrawal after attaining the age of 60. Subscriber is required to invest at least Rs 1000 per annum in the Tier 1 Account.

Tier 2 Account

PFRDA introduced the Tier 2 Account as investment account.To operate Tier 2 account, subscriber requires to open Tier 1 account. Subscriber may open Tier 2 account any time after opening Tier 1 Account.

As the name suggests, the account is purely for the purposes of investment and the subscriber may enter or withdraw the sum and the returns as per his convenience. Subscriber may opt for the Tier 2 account, and upon opening no minimum Contribution required  for Tier 2.

* Note if Tier 1 PRAN is frozen, the Tier 2 account is also kept in "Freeze" status even if it meet the required criteria. 

Fund options

Subscribers gets the option to invest under following asset classes as per their choice and risk appetite :

  • Equity (Asset Class E)
  • Corporate Bonds (Asset Class C)
  • Government Securities (Asset Class G)
  • Alternative Investment funds (Asset class A) 

Subscriber has the flexibility to switch the asset allocation as per his wishes once in a financial year.

Investment Options

The Pension Scheme gives the Subscriber flexibility to select the right mix of 3 asset classes for the investments made by him. 

  • Active Choice – Under this option, subscriber can select the asset allocation among Equity (but not more than 50%), Corporate Bonds and Government Securities as per his / her choice.
  • Auto Choice – Under this option, funds invested across three asset classes is allocated by a pre – defined formula based on the age of the Subscriber. The Auto choice is also known as Life Cycle Fund option
Life Cycle Fund (LC-25)  Life Cycle Fund (LC-50) Life  Cycle Fund (LC-75)

Withdrawal from Pension Account (Tier 1)

The Subscriber may withdraw the amount invested along with the accrued returns from the National Pension System at the time of the exit as per following conditions :

Withdrawal before attaining retirement age of 60
  • Subscriber needs to invest 80% of the accumulated fund in annuity.
  • Subscriber may withdraw only up to 20% of the sum as lump sum.
Withdrawal after attaining retirement age of 60
  • Subscriber needs to invest 60% of the accumulated fund in annuity.
  • Subscriber may withdraw up to 40% of the amount invested as lump sum.