As a NPS subscriber, one cannot use credit card as a mode of payment now for making payment towards subscription or contribution in Tier-II accounts of National Pension System (NPS), reported Business Line
The pension regulator PFRDA has discontinued the facility of credit card payments in Tier-II NPS Account. A PFRDA official said that the latest move was intended to curb the misuse of credit cards by NPS subscribers in operation of Tier-II NPS account.
“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 Points of Presence (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,” a PFRDA circular issued on Wednesday said.
Voluntary savings account
A Tier-II account acts as a voluntary savings account and only a Tier-I NPS account holder is eligible for opening a Tier-II NPS account. A Tier-II NPS account has flexible exit and withdrawal rules in comparison to Tier-I NPS account. There are no exit loads when funds are withdrawn from Tier-II account.
Tier-I NPS investment is a long-term one and the amount cannot be withdrawn until retirement.
This is not the case with Tier-II account as you can withdraw money at any point in time. No minimum balance is required in an NPS Tier-II account. Also a NPS Tier-II account holder has an option to choose a different investment pattern from Tier-I. The funds can be moved to primary pension account (Tier-I) at any point.
Although credit cards cannot be used for Tier-II account contributions henceforth, there is no restriction on payment through credit card for Tier-I account.