The Pension Funds Regulatory and Development Authority (PFRDA) has decided to no longer accept payment of contributions/contributions using credit cards as a method of payment in the National Pension System (NPS) Tier II Account ). The regulator has asked all points of presence (PoPs) to immediately stop accepting credit cards for payments on NPS Tier II accounts.
In a circular dated 03 August 2022, the PFRDA said: “The Authority has decided to discontinue the credit card subscription/contribution payment facility as a method of payment in the NPS Tier II account. Accordingly, all Points of Presence are advised to stop accepting credit card as a method of payment for the NPS Tier II account with immediate effect. »
The regulator said it had taken the decision to halt the use of credit cards in NPS Tier-II accounts in exercise of powers conferred under section 14 of the Act 2013 Pension Funds Regulatory and Development Authority “to protect the interests of subscribers and to regulate, promote and ensure the orderly growth of the national pension system and the pension schemes to which the law applies.
NPS was the only savings vehicle that allowed account holders to invest using their credit cards through the eNPS portal. Although the credit card payment facility is still available for the NPS Tier-I account, you cannot contribute to the NPS Tier-II account using your credit card.
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The use of credit cards for payments to investment programs such as mutual funds or stocks etc. is generally not encouraged due to the fear of excessive leverage on high interest money. Credit card users must pay 0.60% (excluding GST) as a payment gateway fee to contribute to the NPS with a credit card through net banking.
The NPS Tier II account is a voluntary account that a subscriber can open if they have an NPS Tier I account. The Tier II account has flexible withdrawal and exit rules. In addition, contributions to the NPS Tier II account do not qualify for any tax exemption.
