NPS is an easy-to-use, low cost, tax-efficient, flexible and portable retirement savings account. This defined contribution based pension scheme is a Government of India initiative to provide old age security and pension requirement to all citizens of India. The NPS was rolled out for Indian Citizens on May 01, 2009.
The person (employee/citizen) who joins the NPS will be known as ‘Subscriber’ in the NPS. Under the NPS, each subscriber will open an account with Central Recordkeeping Agency (CRA) which will be identified through unique Permanent Retirement Account Number (PRAN).
There are two types of NPS accounts
to Subscribers :
- Tier I Account: This is known as pension account and is mandatory to open.Tax benefit on Investment amount is available only in this Account
- Tier II Account: Opening of this account is optional for investment purpose. The subscriber has the flexibility to can withdraw from this account as per their requirements
Tier II account can be opened along with Tier I account or at a later point of time.