The National Pension Scheme (NPS) is a well-known retirement savings system in India. If you begin investing in NPS early in your career, it’s essential to manage your expenses carefully since you’re required to make regular minimum contributions. Failure to meet these requirements or provide accurate documentation could result in your NPS account being frozen.
Are you experiencing difficulties accessing your NPS account? If so, it may be because your account has been frozen. Read on to discover how to unfreeze your NPS account, the reasons why it might be frozen, tips to prevent this issue, and more.
Why NPS Accounts Get Frozen?
Many NPS subscribers are puzzled when they find out their accounts are frozen. Here, we’ll explain the common reasons for this.
Minimum Contribution:
To keep your Tier I NPS account active, you need to deposit at least Rs. 6,000 per year. However, there’s no such requirement for Tier II accounts. If you fail to meet this minimum, your account can freeze. Remember, if your Tier I account freezes, your Tier II account also becomes inactive.
KYC Compliance:
Not following KYC (Know Your Customer) norms won’t freeze your NPS account. However, if you’ve submitted your KYC documents but they’re pending approval, your account may freeze until they’re processed.
Membership Form Submission:
Even if you’ve subscribed to NPS online, you still need to send the physical form to the Point of Presence Service Provider (POP-SP) or Central Recordkeeping Agency (CRA). If you fail to do this, your account could freeze.
How to Unfreeze Your Inactive NPS Account?
You have two main options to unfreeze your inactive NPS account. First, you can do it online by paying the minimum contribution along with a penalty. Second, you can visit a bank branch to unfreeze your NPS account offline.
How to Confirm If Your NPS Account is Frozen?
Before taking steps to unfreeze your account, you should ensure it’s frozen or inactive. Typically, you’ll receive warnings beforehand.
You might notice an error message indicating that you haven’t met the minimum contribution requirement for your NPS account. Additionally, you’ll likely receive an SMS warning about the possibility of your account being frozen if you don’t take action within 30 days. Once your account status changes from active to frozen, you’ll receive another SMS or email notification.
If you have outstanding debts, creditors may freeze your NPS account and collect dues directly from your bank. In case you’re unable to withdraw money or transfer funds from your account, it’s a clear sign that your account is frozen.
Here’s how you can tell if your bank account is frozen:
- You can’t access your funds.
- Your ATM or debit card is unusable.
- Electronic transfers or payments are not allowed.
- Checks written using your funds won’t clear.
In essence, any transaction you attempt will fail if your account is frozen.
Furthermore, your bank will send a notice about the frozen account. However, they may execute the freeze before notifying you. Therefore, it’s advisable to check the official portal to understand why your account was frozen.
Steps to Reactivate Your Frozen NPS Account
If your NPS account is frozen, you need to unfreeze it to continue planning for your retirement. Here’s how you can do it:
Online Contribution:
Visit the eNPS website and go to the contribution section. Pay at least Rs. 500 per month for the period your account was frozen, along with any additional fees. After paying, you’ll get an email confirmation, and your NPS account will be active again. Then, you can start making regular yearly contributions by logging in.
Offline Contribution:
You can also go to a bank or Point of Presence (PoP) to reactivate your account offline. Make the required contribution there to unfreeze your NPS account. You’ll need to give them a Demand Draft (DD) or cheque. Once the payment is made, your NPS account will be connected to the PRAN listed on the NCIS.
Addressing KYC Rejection:
If your KYC is rejected or still pending, your NPS account might get frozen. Here’s what you should do: a. Get the registration form, attach your photo, and sign it.
b. Visit the nearest PoP for physical verification along with your PAN card, ID, and address proofs.
c. Fill in all the details on the form, sign it, and submit it at the PoP.
Once everything is sorted out, your PRAN will be active again. You’ll receive an email confirmation, and you can start contributing annually to secure your retirement.
How to Unfreeze NPS Account Online?
Opting to unfreeze your NPS account online is the easiest option. Digital platforms make it simple and convenient.
Here’s what you need to do:
- Log in to the eNPS portal with your details.
- Click on ‘Contribution’ in the menu.
- Enter your PRAN, subscriber type, and date of birth.
- Start your minimum contribution of Rs. 500.
- Enter the OTP you receive and submit.
- You’ll get confirmation via email.
- Your account will be unfrozen, and you can start contributing again for your retirement planning.
How to Unlock Your NPS Account Offline?
To unfreeze your NPS account offline, you can visit a nearby POP-SP (Point of Presence Service Provider) in your area. Here’s how you can do it:
Minimum Contribution:
You need to make a minimum deposit of Rs. 6,000 at least once a year. Fill out the PFRDA unfreeze request Form UOS-S10 and submit it to the POP-SP representative. Here are the important points to remember:
- Attach a copy of your PRAN card with the form.
- Deposit a minimum of Rs. 500 per month with a penalty of Rs. 100 for the period your account was frozen.
- You can pay the contribution amount in cash, by cheque, or via demand draft using the NPS Contribution Instruction Slip (NCIS).
- The amount will be credited to your account through the POP-SP, and the update will be uploaded to the CRA system.
- Once approved, you’ll receive an activation email.
Pending KYC Compliance:
Ensure you submit all necessary KYC documents. Sometimes, verification might be delayed at the POP-SP, keeping your account inactive. Follow up with the POP-SP to unfreeze your account sooner.
Membership Form Submission:
Your account might become inactive if you haven’t submitted the NPS form. Fill out the membership form and send it to the CRA to reactivate your account. Regardless of how you joined NPS, your account will be reactivated within a few days of form submission.
Deficient KYC Documents:
If your KYC documents are incomplete or invalid, your account might remain unverified. Submit all required documents to the POP-SP for verification and unfreezing of your NPS account.
KYC Rejection:
Sometimes, your KYC documents might be rejected by the intermediary bank. Ensure all your KYC documents are valid and submit them for smooth verification. Once all your KYC documents are approved, your NPS account will be unfrozen.
How Long Does It Take to Unfreeze an NPS Account?
Once you fill out the form and submit it to the POP-SP or CRA, they will start the process to reactivate your account. Typically, your NPS account will be unfrozen within a few days after you submit the form.
Penalty for Dormant NPS Accounts
The Pension Fund Regulatory and Development Authority (PFRDA) levies a fine of Rs. 100 for subscribers with Tier 1, Tier 2, or both types of accounts. To keep standard accounts active, individuals need to deposit Rs. 500 per month for the current fiscal year, accompanied by a Rs. 100 penalty for the duration their NPS account was inactive.
Should the contribution amount fall short of the required minimum, the CRA will reject the contribution during the uploading process.
Conclusion
By now, you should know how to unfreeze your NPS account. Having an NPS account is crucial for meeting your long-term financial goals and securing your retirement. If your NPS account becomes inactive, it can affect your savings. It’s important to quickly identify the reason and find ways to unfreeze your account.
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Frequently Asked Questions (FAQ’s)
The penalty for a frozen NPS account is Rs. 100 for both Tier 1 and Tier 2 account holders. Additionally, there’s a requirement to deposit Rs. 500 per month for regular accounts, along with a penalty of Rs. 100 for the duration the account remained inactive.
To reactivate a frozen NPS account, you can either make a minimum contribution online through the eNPS portal or visit a bank or Point of Presence (PoP) facility offline. Ensure you fill out the necessary forms and submit them to the appropriate authorities.
Having an inactive NPS account can affect your long-term financial goals and retirement savings. It’s essential to identify the reason for the inactivity and take steps to unfreeze the account promptly to avoid any negative impacts on your financial health.
Maintaining an active NPS account is crucial for fulfilling your financial objectives and securing your retired life. It ensures that you continue to contribute regularly towards your retirement savings, which is essential for building a healthy corpus for the future.
To prevent your NPS account from becoming inactive, ensure you meet the minimum contribution requirements and submit all necessary KYC documents on time. Regularly monitor your account to identify any issues promptly and take corrective actions as needed.
About the Author
Vijaykumar S. Pal(Content Writer)
As a Accountant, I’m deeply immersed in the intricacies of income tax, GST, and maintaining financial records. Numbers are my forte, and I excel in deciphering complex financial statements and tax regulations. However, there’s another side of me that revels in the realm of words rather than figures. Writing has always ignited a passion within me. Whether it’s simplifying intricate financial concepts for broader comprehension or weaving captivating narratives, I find joy in crafting articles and blog posts that demystify the intimidating world of finance for everyday individuals.