NPS rule change: Contribution from credit card stopped in tier-2 accounts
Premium- NPS scheme: PFRDA has decided to stop the facility of payment of subscriptions/contributions using credit card as a mode of payment in the Tier-II account of NPS
NPS rule change: The Pension Fund Regulatory and Development Authority (PFRDA) has decided to stop the facility of payment of subscription of contribution in tier-2 accounts of national Pension System (NPS). The PFRDA made its decision public through an official notification dated 3rd August 2022. So, after this decision of PFRDA, payment from credit card for tier-1 account of NPS will remain whereas payment from the credit card for tier-2 account is no more available for the NPS account holders.
Informing about discontinuing the credit card payment in tier-2 NPS account, PFRDA circular said, "The Authority has decided to stop the facility of payment of subscriptions/contributions using credit card as a mode of payment in the Tier-II account of NPS. Accordingly, all PoPs are advised to stop the acceptance of credit card as a mode of payment for the Tier-II account of NPS with immediate effect."
The PFRDA issued the circular exercising its powers conferred under the Section 14 of Pension Fund Regulatory and Development Authority Act, 2013 to protect the interest of subscribers and to regulate, promote and ensure orderly growth of the National Pension System and pension schemes to which the act applies.
However, payment from credit card for tier-1 account of the NPS will continue. Credit card payment for investment in mutual funds or stocks are not encouraged as such payments involve over leveraging of high interest money. For example, NPS account holders opting for credit card payment need to pay payment gateway charge of 0.60 per cent. The over-leveraging goes further higher when we add GST in it.
Things to know about tier-2 NPS account
Tier-2 NPS account are voluntary and a Tier-1 NPS account is eligible for opening a tier-2 NPS account. NPS account holders having a tier-2 account won't be eligible for claiming income tax exemption on investments done in tier-2 account. However, a tier-2 NPS account has flexible exit and withdrawal rules in comparison to tier-1 NPS account.
Apart from this, only those NPS account holders can open tier-2 NPS account who have tier-1 account. One can open a tier-2 NPS account with a minimum investment of ₹1000. After that, the NPS account holder can contribute in NPS tier-2 account in multiple of ₹250 without any upper limit.
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