Everything about Tier 2 NDCPS Account

Government has distinguished NDCPS account into two different tiers viz. Tier 1 and Tier 2 for differentiation and ease of implementation. Tier 1 NDCPS account is the basic and mandatory account for any NPS subscriber.
But it is less flexible and restrictive in nature, as amount to be credited in Tier 1 account is fixed and the account holder is not allowed to withdraw money prematurely. While Tier 2 account is flexible in nature, as account holder can credit and and withdraw money at his / her will. Tier 2 NDCPS account was launched in December 2009. Let us see the features of Tier 2 account, which are distinguished from Tier 1 NDCPS account.

Salient Features of Tier 2 NDCPS account:

     -         Account holder of Tier 2 account enjoys more flexibility than Tier 1 account, as           the credit and withdrawal of money is allowed anytime.

     -         There is no penalty fee on withdrawal of money. You can withdraw your money            anytime.

     -         You can credit amount of investment using your Tier 1 PRA Number (PRAN)                Permanent Retirement Account Number. As PRA Number is common for both             Tier 1 and 2 account.

     -         Like Tier 1 account, you can choose in which asset class you want to invest. The selection of asset class is different for both tiers means you can choose your Tier 2 investment differently than Tier 1 account’s asset class selection.

Name Asset Class	Possibility of Return of Investment	Risk of Investment	Investment Purpose
Asset Class E	High	High	Investment in predominantly equity market instrument. (Invested in share market)
Asset Class C	Medium	Low	Investment in fixed income instruments other than Government Securities (Invested in Non government company / institution for fixed income)
Asset Class G	Low	Very Low	Investment in Government Securities.

Please note that only 50% of investment can be done into Asset Class E (Equity market instrument).

        -         You can choose your investment plan. If you do not want do that then you can set AUTO OPTION for you investment. In AUTO OPTION, your contribution goes into funds based on your age and service profile.

       -         Nomination facility to Tier 2 account is also available. It can be different than Tier 1 account.

       -         Opening a Tier2 account is very good for those Account holders who are interested in medium term investment.

       -         Tier 2 investment does not have any locking period. So investment in Tier 2 account is not qualified for income tax rebate under section 80 of Income Tax Act 1961. So the investment in Tier 2 account is not deducted from your income.

       -         Tier 2 account is optional for NDCPS account holder while Tier 1 NDCPS account is  mandatory.

Who can open Tier 2 NDCPS account (Eligibility Critea) ?

-         For government employee, only active Tier 1 NDCPS account is enough for opening a Tier 2 account. One cannot open only Tier 2 account alone. 



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