Interim pension regulator PFRDA will launch from December this year its savings scheme, which aims to give greater returns on the deposits, and can be withdrawn fully.
"We have decided to launch the savings scheme from December 1 this year. Under this scheme, the customers would have be able to withdraw their entire savings," Pension Fund Regulatory and Development Authority (PFRDA) Chairman D Swarup told PTI.
He added that returns on this scheme, known as tier II account, "are expected to be higher due to our market-linked investment patterns".
The essential feature of this saving account would be liquidity. Customers needing money in emergency situations would be able to withdraw their entire deposited sum.
However, the customers, who wants to open the Tier II account must also have Tier 1 account and both accounts should run separately.
"Those who wants to open the Tier II account should essentially have Tier I account as the basis purpose of PFRDA is to manage the pension fund," a PFRDA official said.
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Tier 1 account was operational from May 1, under the New Pension System.
Under it, a customer can only withdraw 20 per cent of the money as a lump sum before he or she attains 60 years of age. On attaining 60 years, the customers can withdraw 60 per cent as lump sum. The amount withdrawn from the savings account would be subjected to tax as it is under exempt-exempt mode like the Tier I account.
Under exempt-exempt, the amount is exempted from tax when deposited and also when it accrues interest, but tax is levied at the time of withdrawing the amount.
NPS was implemented for government employees who joined service on or after January 1, 2004. On May 1, it was extended to all citizens.
There are six fund managers for all citizens' scheme-IDFC Mutual Fund, Kotak Mahindra, SBI, UTI Asset Management, ICICI Prudential Life Insurance and Reliance MF-to manage the corpus of customers.Pension Fund managers are managing three separate schemes, each investing in a different asset class.
These asset classes are equity, government securities and credit risk-bearing fixed income instruments. Besides, there are 21 Points of Presence (PoPs) of NPS, which include, State Bank of India, ICICI Bank, IDBI Bank, Oriental Bank of Commerce, Axis Bank and Union Bank of India.
PoPs are contact and collection points for customers wanting to be part of NPS.