How to reactivate your frozen NPS account — A step by step guide
The National Pension System (NPS) stands as a valuable asset in financial planning, particularly for retirement purposes. Despite its substantial advantages, private sector individuals, unlike government employees, are required to opt for participation and personally handle their contributions. Nevertheless, a notable distinction exists in contribution limits for government and private sector employees.
Government employees have the flexibility to contribute up to 14% of their basic salary, whereas private sector employees are constrained to a limit of 10%. Furthermore, the prevalence of employer contributions is higher among government employees in comparison to their private sector counterparts.
For those unfamiliar with it, the NPS allocates your contributions across a combination of market-linked instruments (equity) and debt instruments, providing a balance between growth potential and stability. You can customize your asset allocation according to your risk tolerance and investment timeframe. There are two categories of NPS accounts: Tier-1 and Tier-2, each designed for specific purposes with distinct features. Tier-1 functions as a primary retirement account, whereas Tier-2 is ideal for individuals looking to save voluntarily.
Errors may result in the potential freezing of NPS accounts. It is essential to identify the types of mistakes that can lead to deactivated NPS accounts before delving into the reactivation process. The common errors that lead to the freezing of NPS accounts include:
Understanding the cause of deactivation is crucial for the reactivation of a frozen NPS account. This can be accomplished either online through eNPS or offline at a Point of Presence (PoP). You will need to follow simple steps
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