NPS Tier II investment are best mutual fund alternatives - Here’s how to activate this account online and offline

Unlike like National Pension Schemes (NPS) Tier  I account, the Tier II are opted on voluntary basis. However, there is a lot of difference between these two accounts. Considering that NPS account are partly linked with equities, the Tier II fully embraces this section and are more like a mutual fund investment. When you decide to invest in NPS Tier II account, your investment gets divided into different funds just like MFs. Also, among major features is that the Tier II account does not have lock-in period which allows investors to withdraw their money anytime they want. Hence, here Tier II account brings flexibility than compared to Tier I. Investment in Tier II account is carried further to enhance NPS account corpus on retirement. 

That said, the Tier II account aims to provide a window of liquidity to meet financial contingencies and build savings through investments.

Here’s some key features of Tier II account, as per NSDL. 

1. No additional CRA charges for account opening and annual maintenance in respect of Tier II.

2. Enjoy unlimited online withdrawals and get credit in your Bank Account depending upon your requirements.

3. Separate Nomination in Tier II account.

4. Contribute in Tier account online at www.enps.nsdl.com or deposit your contribution to any POP/POP-SP of your choice.

5. Separate Scheme Preference for Tier II.

6. You can changes Scheme Preference twice a year and Pension Fund Managers (PFM) once a year.

7. Two Investment options:

• Active Choice-Individual Funds (E,C,G assets)
• Auto Choice –Life Cycle Funds

8. Bank details are mandatory for opening Tier II account (Along with cancelled cheque leaf).

9. Minimum contribution amount is Rs.250.

Here’s how you can activate your Tier II account using online and offline mode. 

Online (eNPS):

Step 1 - Visit eNPS website (https://enps.nsdl.com) and Click on "Tier II Activation"

Step 2 - Submit three mandatory details to get OTP

• Permanent Retirement Account Number (PRAN)
• Date of Birth (in DD/MM/YYYY format)
• Permanent Account Number (PAN)

Step 3 - Fill up online all the mandatory details & make online payment (Minimum amount of Rs 1,000)

Step 4 - Send the auto-populated form along with copy of PAN & Cancel cheque to NSDL-CRA

Offline: 

Step 1 - Fill up Annexure I of CSRF-1.

Step 2 - Submit the application form along with relevant document to your office/POP-SP.

Step 3 - Documents required are - Annexure I of CSRF-1, Copy of PRAN Card and Copy of PAN & Cancelled Cheque. 

Step 4 - Submit minimum contribution of Rs. 1,000 & take acknowledgement receipt.

Hence, if you find mutual fund investment risky or are not comfortable, then NPS Tier II account can be your alternative.