National Pension System (NPS) is a great tax-saving retirement fund and the perfect long-term investment tool.
- Under the NPS, there are two types of accounts – Tier I and Tier II, the former being mandatory and the latter, a voluntary or additional one.
- If you are looking for a nofrills and easy to operate savings option under the NPS umbrella, consider the Tier II account.
- The Tier II account is not a retirement savings scheme. It is, in fact, a savings facility that can be opened once a person has a Tier I account.
- There are no withdrawal restrictions in this optional investment account.
- Unlike the Tier I account that requires a minimum contribution per annum, there is no such requirement for the Tier II account.
- However, the subscriber has to make a minimum initial contribution of Rs 1,000 for Tier II (₹500 for Tier I) at the time of registration.
- There is no limitation on the maximum amount you can invest in both the accounts.
- The Tier II account works just like the NPS Tier I account in terms of investment options and can be opened by all citizens in the age group of 18-65 years.
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