To check misuse of NPS, PFRDA bars third party payments in Tier II accounts

New Delhi: In order to arrest the misuse of NPS, pension fund regulator PFRDA has said contribution to savings account (also called Tier-II account), which is attached to pension funds, can only be made by the subscriber and not by any third party.

National Pension System (NPS) is structured into Tier-I (main pension account) and Tier-II (voluntary savings account).

"Keeping in view the nature of the Tier-II account and facility of any time withdrawal, it has been decided to disallow any third party contribution in Tier-II account henceforth," Pension Fund Regulatory and Development Authority (PFRDA) said in a circular.

It has asked the nodal offices and Points of Presence (POPs) to ensure that NPS contribution by the subscriber to the NPS Tier-II account "is being made from his/her own bank account" and through own legitimate source of funds.

Further, Central Record Keeping Agency and nodal officers/ POPs have been asked to take a declaration from subscribers that the transaction for his or her Tier-II account is "from my own bank account and through my legitimate source of funds".

However, in case the contribution is being made directly through the subscribers bank account, the declaration would not be required.

With PTI Inputs