New Delhi: In an attempt to broaden its base of pensioners, Pension Fund Regulatory and Development Authority (PFRDA) increased the maximum age of joining under NPS-private sector from 60 years to 65 years of age, said ministry of finance in a statement released on Wednesday.

“Now, any Indian Citizen, resident or non-resident, between the age of 60- 65 years, can also join NPS and continue up to the age of 70 years in NPS. With this increase of joining age, the subscribers who are willing to join NPS at the later stage of life will be able to avail the benefits of NPS,” said ministry of finance in the statement.

The subscriber joining NPS beyond the age of 60 years will have the same choice of the Pension Fund as well as the investment choice as is available under the NPS for subscribers joining before the age of 60 years.

“Subscriber joining NPS after the age of 60 years will have an option of normal exit from NPS after completion of 3 years. In this case, the subscriber will be required to utilize at least 40% of the corpus for purchase of annuity and the remaining amount can be withdrawn in lump-sum. In case of such subscriber willing to exit from NPS before completion of 3 years, he/she will be allowed to do so, but in such case, the subscriber will have to utilize at-least 80% of the corpus for purchase of annuity and the remaining can be withdrawn in lumpsum,” added the statement.

Ministry of finance, under the regulatory body, PFRDA, came up with NPS to securitise income and net earnings of subscribers, especially the ones nearing retirement.

It is a contributory pension system in which the contributions are invested in a variable assets and the retirement corpus is dependent on the returns from those assets.

Under NPS, an investor can open two accounts, called Tier I and Tier II account. Tier I account is a non-withdrawable permanent retirement account whereas Tier II is a voluntary withdrawable account. Tier II account can be opened only when you have an active Tier I account. The minimum contribution in Tier I account is Rs 500 for all transactions and Rs 6000 for a year. For Tier II account, the minimum contribution for opening an account is Rs 1000 and Rs 250 is charged for subsequent transactions.

NPS, however, faces hurdles such as lack of awareness, lack of flexibility and tough private competition.

“It is not surprising that NPS has not found many takers. With better and more transparent private schemes available, subscribers tend to shift. Moreover, financial literacy is always an issue in the country,” said Hemant Beniwal, certified financial planner, New Delhi.