What happens if you don’t make minimum annual contribution in NPS account

There are 4 types of individual funds in which your money can be invested:
Asset Class E- Investment in predominantly equity market instrument
Asset Class C-Investment in fixed income instruments other than Government Securities
Asset Class G- Investment in Government Securities
Alternate Assets Class A – Investment in Real Estate and Infrastructure projects

Getty Images

Based on these criteria, NPS corporation offers two investing options.

Active choice involves selecting a Pension Fund Manager and specifying the percentage of funds to be invested among E, C, G, and A. You can select how much of your money should be placed in each of these asset classes. However, stock allocation cannot exceed 75%, and alternate assets cannot exceed 5%. Auto selection – There is a lifecycle fund and you must choose a pension fund. Based on your age, your assets will be invested using the life cycle fund matrix You will have the option of selecting one of 10 Pension Fund Managers (PFMs) and the percentage in which the funds are invested.

Getty Images

You need to contribute a minimum amount of Rs 6,000 per annum to keep your NPS account active. Once you make the payment, you will receive an e-mail alert from CRA team. The CRA app provides online access to your account information. With your User ID (PRAN) and Password, you can view the most recent account details accessible on the CRA website (https://cra-nsdl.com/CRA/ or cra.Kfintech.com).

Getty Images

Your account will be frozen, if the minimum annual contribution of Rs. 6,000 is not invested in NPS account, according to the NPS website. The customer has to pay the total minimum contributions for the period during which the account was frozen, the minimum contribution for the year in which the account is reactivated, as well as a penalty of Rs. 100/- in order to unfreeze the account. The subscriber must go to the Point of Presence (POP) and make the necessary payments to unfreeze an account.
While, there are no limitations on how frequently contributions can be made. The subscriber has the choice to contribute in any way, whether it be monthly, quarterly, half-yearly, or annually.

Getty Images

There would be no purchase of an annuity or monthly pension in the tragic event of the subscriber’s passing and the full accrued pension wealth (100%) would be paid to the nominee or legal heir of the subscriber. The subscriber who wishes to exit the NPS must submit a withdrawal application form to the relevant POP together with the required documentation, and the POP will then validate the documents and send them on to CRA M/s NSDL.

Getty Images