Rule 14 — NPS Rules
Original Rule Text
14. Tier-I contributions (and the investment returns) are kept in a non-withdrawable Pension Tier-I Account. From Tier II, the amount is withdrawable at the option of the Government servant while Government would not make any contribution to Tier-II account. There should be at least 1 contribution in a financial year and no minimum balance requirement. There is no limit on number of withdrawals and facility for separate nomination and scheme preference is available.
Exit and Withdrawal from Tier-I.
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What This Means
All Tier-I contributions, along with the investment returns they earn, accumulate in a non-withdrawable Pension Tier-I Account. This account cannot be accessed during service except under specific partial withdrawal conditions. The government does not contribute to the Tier-II account — only the employee contributes to it.
The Tier-II account has very flexible rules: there must be at least one contribution in a financial year, but there is no requirement to maintain a minimum balance. There is no limit on how many times you can withdraw from Tier-II. The subscriber can maintain separate nomination and separate scheme preferences (choice of pension fund manager or investment mix) for the Tier-II account independently of Tier-I.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Tier-I corpus (contributions + returns) is strictly non-withdrawable except under specified partial withdrawal conditions.
- 2Government contributes to Tier-I only; there is no government matching contribution to Tier-II.
- 3Tier-II requires at least one contribution per financial year but has no minimum balance requirement.
- 4There is no limit on the number of withdrawals from Tier-II.
- 5Separate nomination and investment scheme preference are available for Tier-II independently.
Practical Example
Kavita, an Income Tax Officer, has both a Tier-I and a Tier-II NPS account. Her employer deposits 14% of her pay into Tier-I, and she voluntarily adds Rs 2,000 every month to her Tier-II. When she needs money for her daughter's college admission, she simply withdraws from Tier-II — no questions asked, no conditions to meet. Her Tier-I corpus, however, remains untouched unless she satisfies the partial withdrawal conditions (3 years in NPS, specific purpose, and within 25% of her own contributions).
Kavita has nominated her husband for Tier-I and her mother for Tier-II, which is perfectly permissible — the nominations can be different for each tier.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
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This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.