NPS Penalty: Know how much fine you need to pay if you fail to contribute minimum NPS amount yearly
NPS: It is available to all Indian citizens. However, according to the Ministry of Finance's notification on July 5,2003-ECB-PR dated December 22, 2003, NPS is mandatory for Central Government employees who began service on or after January 1, 2004, except those in the armed forces.
NPS or national pension scheme is a market-linked voluntary contribution scheme. It helps investors save money for their retirement and save taxes too. It may be a good scheme for people who seeking higher returns and can take moderate risks.
Who can open an NPS account?
It is available to all Indian citizens. However, according to the Ministry of Finance's notification on July 5,2003-ECB-PR dated December 22, 2003, NPS is mandatory for Central Government employees who began service on or after January 1, 2004, except those in the armed forces.
NPS voluntary mode
The NPS voluntary model is open to all Indian citizens, including those residing abroad, aged 18 to 70.
Benefits of NPS
- Flexible
- Simple and tax-efficient
- Portable
- Regulated and transparent
- The dual benefit of low cost and power of compounding
- Online access
NPS: Types of accounts
NPS is divided into two tiers: Tier-I account and Tier-II account.
Tier – I Account: Features
Individual pension account.
Withdrawal: As per exit & withdrawal rules and regulations.
The minimum contribution to open is Rs 500.
The minimum contribution per year is Rs 1,000.
AMC charges are applicable.
Tier – II Account: Features
Tier-II accounts require an optional account and an active Tier-I account.
Unrestricted withdrawals.
The minimum contribution to open is Rs 250.
There is no restriction on the minimum Contribution per year.
No separate AMC charges are applicable.
Anytime switching to Tier-I is allowed.
NPS: Pension calculator
This pension calculator shows the estimated pension and lump-sum amount you may anticipate at maturity based on regular monthly payments, a percentage of the corpus reinvested to purchase an annuity, and projected rates for investment returns and annuity selection.
What happens if you don't contribute the minimum required amount to the NPS account?
A person needs to contribute at least once per financial year to the NPS account. If he fails to do so, his account will be frozen and he will need to pay a penalty along with paying the minimum contribution for the year.