How to Unfreeze NPS Account: Reasons and Stepwise Guidance
Investing in National Pension System (NPS) can secure your financial stability after retirement, but to enjoy this benefit you have to start investing in such schemes. However, if you have already opened this NPS account, then keep regularly investing in the scheme to ensure the account runs smoothly and can get the maximum returns till the date of its maturity.
However, sometimes due to many reasons, the NPS account is frozen and becomes inactive not allowing the account holder to either invest or withdraw any funds from their account. Many times people don’t get to know if their NPS account is frozen, as the messages sent on mobile or email are not read by them. They only realize it when they attempt to deposit their monthly installments.
What happens if the NPS Account is frozen?
When your NPS account is frozen, it becomes inactive means, you cannot deposit any amount into it or withdraw from it (If NPS Tier II) till the activation. Freezing such accounts doesn’t mean, your invested money is gone, don’t worry it is safe in your account, but freezing your account can have serval adverse impacts (given below) regarding your pension plans.
NPS account becomes Inactive: When your NPS account is frozen, it will be inactive not allowing you to do any transaction until you unfreeze it.
Penalty to Reactivate the Account: To unfreeze your account you have to pay the penalty of Rs 100 along with the minimum contribution for that year (Rs 500 per month). This amount of penalty is applicable for both types of NPS accounts – Tier 1 and Tier II.
Tax benefits not applicable: Investing in NPS gets the benefit of tax deductions under Section 80C and 80CCD (1B). If your account is frozen because of missing the minimum contribution, then you would not be eligible to claim the deductions at the time of filing tax returns for that financial year.
Instability of Returns on Investment: The account frozen because of non-payment of minimum contribution may also affect the rate of interest of returns you get on your investment. This will also affect the overall expected return at the time of maturity of your fund.
Retirement Saving Affected: Missing a contribution or having your account frozen for other reasons can also affect the growth of your retirement saving. The accumulation of funds with regular investments and interest earned on compounded basis all can be affected because of missing contributions, delayed payments and penalties imposed on such investments.
Why NPS Account is frozen?
Though, there could be multiple reasons, the NPS account is frozen, from incomplete KYC to missing the installment of deposits or incomplete documents etc. Apart from the most common reasons, there could be technical issues or because of suspicious or unauthorized transactions, the account is frozen to ensure the safety and protection of funds of the investors.
Top Reasons NPS Account is Frozen:
Minimum Contribution: This is one of the most common reasons, your NPS account might be frozen because you are not depositing the minimum amount as per the rules. If your account is Tier I, you have to deposit a minimum of Rs. 1,000 every year to keep your account active. If you fail to deposit the minimum amount your account will be frozen. However, Tier II accounts don’t need such requirements but can affect the access of your Tier I account.
Incomplete KYC: Another common reason is when your KYC documents are incomplete or there is any mismatch between your account details like ID or address with the document you submitted. The KYC might be rejected and pending for the verification and your account might be frozen.
Submission of Membership: You can complete or subscribe to the NPS scheme online but to confirm your membership still you have to submit a physical form to POP-SP (Point of Presence Service Provider) or Central Record Keeping Agency (CRA). If you don’t submit this membership form, your account might be frozen.
Inactivity in Account: If you have not done any transactions for a long time, this could be another reason why your account might be frozen.
Suspicious Transaction: Any suspicious transaction such as attempt of unauthorized withdrawal or contribution could also lead to an account freeze.
Technical Issues: This issue is rare but can come anytime unexpectedly. If there is any technical breakdown at the server of your service provider or at restrictions of withdrawal is made by freezing your account. Though, you will be informed of such actions, but still you need to confirm from your service provider by visiting the office or contacting customer service.
How to Unfreeze NPS Account?
Once you get to know the reason behind the freezing of your NPS account, you can now take action to reactivate it as per the procedure required. As per the reason you need to take the next step to active you’re frozen NPS account. However, there are certain documents required to activate your NPS account that you should keep handy at the time of activation.
Details & Documents Required for Unfreezing NPS Account:
NPS Account Details: First of all you need your NPS account details like the name in which you opened the account with the account number so that your account can be verified.
Any Change Details: If you have made any changes in your personal details such as your name, surname or address since opening your NPS account, you must submit the updated documents to verify and update your account before it can be unfrozen.
For ID Proof: For identity proof you can use an Aadhar card, PAN, Voter ID card or passport having the correct details of your identity as you have submitted at the time of opening the account.
For Address Proof: For address proof, you can submit the Aadhar card, rent agreement, utility bills and bank passbook to PSU Bank.
Bank Statement: You also need to show the statement of your bank account linked with your NPS account to unfreeze your account.
Unfreezing Request Form: This is typically Form UOS-S10, but it’s best to confirm with your Point of Presence (POP) to be certain.
KYC Documents: If your account is frozen due to pending KYC, then you can submit all the required documents as per the KYC norms.
Proof of Minimum Contribution: If your account is frozen because of non-payment of minimum contribution, then you need to submit proof of minimum contribution.
How to Unfreeze NPS Account Online or Offline?
Keeping all the documents ready, you can start the procedure of unfreezing your account. You can unfreeze your NPS account online as well as offline.
Steps to Unfreeze NPS Account Online:
Step 1: Visit the eNPS Portal: Go to the official eNPS website.
Step 2: Now click on login menu and use your user ID and password to login.
Step 3: After login, now navigate to the contribution option in the menu.
Step 4: Now you have to submit your PRAN, NPS subscriber type, and birth date.
Step 5: Here you have to make the minimum contribution that is Rs 500 to unfreeze your account.
Step 6: You will get the OTP on your registered mobile number to verify your account.
Step 7: Now make your payment using various modes of online payments like UPI or Cards.
Step 8: Once your payment is successfully done, you will get the confirmation mail on your mail ID.
Steps to Unfreeze NPS Account Offline:
Step 1: First, you have to find the Nearest “Point of Presence – Service Provider” in your city.
Step 2: Fill out the official unfreeze form (Form UOS-S10) carefully.
Step 3: Along with this form, you also have to submit the required documents including a copy of your PRAN card.
Step 4: Now you have to pay the minimum contribution amount with an additional amount penalty if imposed.
Step 5: Just submit the form with documents and payment at the relevant counter.
Step 6: Get the acknowledgement receipt for future reference if the account is not unfrozen.
Wrapping-up
The frozen NPS account you can’t do any transactions until it’s unfrozen. Minimum contribution or incomplete KYC are the top reasons behind the freezing of such accounts. To unfreeze it you have to pay the minimum penalty amount along with the minimum contribution amount and required documents and filled reactivation form if doing offline.
Delay in requesting to unfreeze your account can affect your financial stability relying on investment in such long-term schemes. Apart from not being able to claim the tax benefit given under such schemes you have to pay penalties and can get low returns due to account freeze. Hence, activate your frozen NPS account now and ensure your retirement pension funds.
