The National Pension Scheme is brought into action in the welfare of both the public and private sector. The subscribers of NPS can choose to have an account according to their interest. NPS consists of two types of accounts, which the users can choose to have. Following are the two types of accounts that are available under NPS:
National Pension Scheme- Tier 1 account
National Pension Scheme- Tier 2 account
Below is a brief description of both types of accounts:
NPS Tier – I Account: This account is sanctioned when a subscriber opens an NPS account, it imposes the following restrictions while carrying out the withdrawal process.
1. Only 20% is to be received as a lump sum if withdrawn before attaining 60 years of age.
2. Only 60% is to be received as a lump sum if withdrawn at attaining 60 years of age.
The rest amount, in either case, is spent on buying the annuity from IRDA- Regulated life insurance company.
NPS Tier – II Account: For this account, the subscriber has to opt for it. It is a type of withdrawable account to provide liquidity to the subscribers. But to opt for a Tier- II account, a working Tier- I account is a must.
This account is free of any CRA charges, and there will also be no limits on the number of withdrawals from this account.
