As we approach the end of the financial year, you would like to check whether you have made the minimum investment required to keep the savings and pension schemes active. There is a mandatory minimum investment in Public Provident Fund (PPF), Sukanya Samriddhi Yojana (SSY), and National Pension Scheme (NPS) every financial year. Telling you what you can lose if you default and how to reactivate an inactive account.
PPF: The minimum investment required to keep PPF active is Rs 500. You will have to write an application to the bank or post office with which the account was opened so that it can be activated. With the application, you have to pay Rs 50 for each default year, Rs 500 paid for all the years and Rs 500 Rupees as the fee for re-subscription for the year in which you activate the account.
There is no maximum contribution limit in PPF, you get tax exemption and interest only up to Rs 1.5 lakh per financial year. Unless you activate the account, you cannot take a loan or make a partial withdrawal on the PPF balance after three and five years respectively. The outstanding balance in the closed account earns interest till maturity. Default accounts cannot be activated after maturity and if your account is closed at the time of maturity, you cannot carry forward the account for the next five years.
NPS: Minimum contribution of Rs 1,000 per financial year to NPS Tier 1 accounts with no upper limit. There is no minimum mandatory contribution for Tier II accounts. By default, your Tier 1 account will be frozen. Account holders who transact online can directly regularize it by paying a penalty of Rs 100 along with Rs 1,000 as arrears for each default year. Offline account holders should write in their presence (POP) to initiate the process of unfreezing.
SSY: To keep the SSY account active, the parent/legal guardian has to pay at least Rs.250. Default attracts a fine of Rs 50 per defaulting year. If the account is not regularized, the interest will not be affected and the balance will earn interest till the maturity period of 21 years. Note that since deposits are allowed in SSY only up to 15 years, the account can be activated before that.