ABOUT THE TIER II SCHEME

 
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New pension-cum-savings scheme(Tier ii)by year end: PFRDA
The new kind of pension-cum-savings scheme (TIER II) is on the anvil which would provide a safety net as well as liquidity to the holder.


The scheme, called tier II account, may be introduced by the end of this calendar year, a top official of Pension Fund Regulatory and Development Authority (PFRDA) said.

The essential feature of this saving account would be liquidity. Customers needing money in emergency situations would be able to withdraw their deposited sum.

In this pension saving account, customers can withdraw almost the entire amount, though a small part might be retained with the fund manager, as directed by the interim pension regulator, the official said.

The pension amount withdrawn would be subjected to tax as it is under exempt-exempt mode like the Tier I account.

Under exempt-exempt, the amount is exempted from tax when deposited and also when it accrues interest, but tax is levied at the time of withdrawing the amount. Investment patterns and other guidelines would be the same as applied to Tier I account.That means,when an employee joins this scheme,another 10% of his salary will be deducted.However the TIER II scheme is not mandatory like TIER I.

However, the customers who wants to open the Tier II account should essentially have a Tier I account.
"Those who wants to open the Tier II account must also have Tier 1 account. Both the account should run separately," an official added.

Under the present structure of NPS, a customer can only withdraw 20 per cent of the money as a lump sum before he or she attains 60 years of age. On attaining 60 years, the customers can withdraw 60 per cent as lump sum.

Besides the pension-cum-saving scheme, PFRDA is working on a separate fund management guideline for corporates, a move that will allow them to enter into agreements with fund managers for managing the pension fund of their employees.

NPS was implemented for government employees who joined service on or after 1 January 2004. On May 1, it was extended to all citizens.

There are three fund managers-LIC,UTI and SBI for Central Govt employees and six fund managers for all citizens' scheme-IDFC Mutual Fund, Kotak Mahindra, SBI, UTI Asset Management, ICICI Prudential Life Insurance and Reliance MF-to manage the corpus of customers.

Besides, there are 21 Points of Presence (PoPs) of NPS for all citizen, which include, State Bank of India, ICICI Bank, IDBI Bank, Oriental Bank of Commerce, Axis Bank and Union Bank of India.

PoPs are contact and collection points for customers wanting to be part of NPS.
posted by Syam @ 7:07 PM   0 comments
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