Outlook Money
NPS Tier 1 account is a retirement savings plan, whereas the Tier 2 account is a regular investment plan.
Indians aged 18-70 can open Tier 1 accounts, while Tier 2 applicants must be enrolled in Tier 1 to be eligible.
The lock-in period in a Tier 1 account is until the retirement age of 60; a Tier 2 account has no lock-in.
Tier 1 account holders can withdraw up to 60% of the corpus tax-free at maturity, the rest is used for annuity plans; Tier 2 accounts have no maturity period.
Tier 1 accounts offer both active and auto investing options, while Tier 2 account holders can only access the active option.
Tier 1 account holders can withdraw 25% of their invested corpus thrice until maturity after three years; Tier 2 accounts do not have such restrictions.
Tier 1 account holders get tax benefits, while Tier 2 accounts don't have such relief, as withdrawals are added to the individual's taxable income and taxed accordingly.
Tier 1 account holders require to buy an annuity plan after maturity, Tier 2 account holders don't have such obligations.
Compiled By Himani Verma