The National Pension System (NPS) is one of the most valuable retirement savings tools. Investing in NPS not only allows you to plan your expenses properly but also ensures regular contributions to the retirement fund and helps inculcate financial discipline. However, if you do not meet the minimum deposit requirements or submit the wrong documents, your NPS account can be frozen indefinitely. In such a case, it is important to know how to unfreeze the account.

Also Read: Power Of Compounding Can Work Magic When You Start Investing Early: Here’s How

Reasons Your NPS Account Might Be Frozen:

There is more than one reason that can lead to deactivation of your NPS account, such as:

Outstanding Contribution Arrears: Failure to make the minimum yearly contributions due to insufficient funds or delayed payments can result in the freezing of the NPS account.

Non-Submission Of Forms To POP Or CRA: Failure to send physical forms, such as withdrawal requests or account update documents, to your Point of Presence (POP) or Central Recordkeeping Agency (CRA) can lead to deactivation of your account.

Non-Compliance With KYC Norms: KYC requirements are crucial to verifying your identity as an NPC account holder. Your NPS account may be deactivated if you submit incomplete or inaccurate KYC documentation, such as wrong identity and address verification.

Fraudulent Or Suspicious Transactions: Unauthorised transactions, such as suspicious withdrawals or contributions, can also lead to the freezing of your NPS account.

Inactivity: Your account could get deactivated if it has been inactive or dormant for an extended period where no contributions or transactions occurred. This measure is taken to prevent misuse of dormant accounts and ensure the security of your retirement funds.

In some cases, technical errors related to contributions or account updates may also lead to the freezing of the NPS account.

Also Read: What Are Premature Withdrawal Rules For Senior Citizen Savings Scheme (SCSS)?

Process For Reactivating An NPS account:

It is vital to understand the reason for deactivation to unfreeze your NPS account. You can reactivate your NPS account online, through eNPS, or offline at a PoP. However, you will need to consider the following steps:

Online Mode:

– First, you will visit the eNPS portal and log in using your registered credentials

– Find the contribution page and enter the required details such as your PRAN (Permanent Retirement Account Number), Date of Birth, and NPS subscriber Type as requested

– After filling in the details, proceed to make the mandatory minimum financial contribution of Rs 500

– Complete the submission process by following OTP-based authentication and entering the provided ‘Captcha’ on your screen

– You will get a payment confirmation via email, and your NPS account will unfreeze in due time, allowing you to resume yearly contributions again

Offline Mode:

– First, you should obtain the registration form and attach your photo, fill in the necessary details

(You can acquire this form from the location where your NPS account had been operational)

– Locate the nearest Point of Presence (PoP) facility authorised by the NPS. Ensure you carry all necessary documents and identification proofs, such as PAN details, identity, and address information for verification.

– Complete and sign the registration form, ensuring it includes your employee ID

– Submit the form at the PoP after successful verification

Once updated, you will receive an email confirmation regarding the reactivation of your PRAN, which will allow you to resume contributions.

Also Read: You Can Propose Another Person If First Nominee In Life Insurance Policy Dies, Add Riders To Boost Protection

How Long Will It Take To Unfreeze Your NPS Account?

Typically, it takes less than a week to reactivate an NPS account. However, it also depends on various other factors, such as the reason for the freeze, documentation, processing time by authorities, mode of submission, and the issue’s complexity.

Is There Any Penalty Involved?

As per the Pension Fund Regulatory and Development Authority (PFRDA) regulations, reactivation of a frozen NPS account attracts a penalty of Rs 100. The penalty applies to subscribers of both Tier 1 and Tier 2 accounts.

The Account Holders Have To Fulfill These Financial Requirements:

– Make the payment of the total minimum contributions for the deactivation period

– Contribute the minimum required fund for the current fiscal year

– Deposit Rs 500 per month for regular accounts, along with the Rs 100 penalty for the year when the account was frozen

It’s crucial to ensure that your contributions meet the minimum requirements, as the CRA may reject the deposit if it falls below the expected amount during the uploading process.