What happens to your NPS account if you change jobs?Your NPS account does not have to be closed if you change jobs. However, there are a few procedures that need to be completed because there are different NPS plans for different types of employment. Central and State Government NPS are for central and state government employees, respectively, while corporate sector NPS is given to employees of NPS participating companies and the All Citizen model is offered to everyone else.

You cannot have multiple NPS accounts, although you can have both an NPS and an Atal Pension Yojana account. As a result, a move between government and private service or between two different governments or between corporate service and self-employment will make it necessary for you to carry out ‘Inter Sector Shifting.’ Moving between employers who don’t offer NPS does not require this procedure. In this situation, you will have an All Citizens account and it has little to do with your employer or employment.

  1. Government Service

If you either move from one government to another (Center to State for example) or move from government to the private sector, you, you are changing your NPS plan. In such a case you would have to fill up the Inter Sector Shifting Form (ISS 1). This also applies if you move into self-employment. In this situation, you can convert your account to NPS All Citizens Model and keep contributing. The minimum amount needed per year to keep your NPS Tier 1 account active is just Rs 1,000.

  1. Corporate Sector

If you are enrolled in the NPS Corporate model and are moving to either government service or the unorganised sector or self-employment, you will once again have to fill the Inter Sector Shifting Form (ISS 1). You can then either maintain full-fledged contributions or just contribute the minimum amount of Rs 1,000 per year to keep the account alive.

  1. All Citizens Model

If you are in the All Citizens Model and are moving into either government service or the NPS corporate model you will have to fill up the Inter Sector Shifting form.

Implications

Asset allocation and fund manager selection in Central Government NPS and State Government NPS is set by the government. The maximum equity allocation is 15% and your money is distributed between three public sector fund managers – SBI, LIC and UTI. In the Corporate Sector NPS, the asset allocation and fund manager are selected by your company.

However, in the NPS All Citizens Model you are free to choose fund managers and asset allocation (subject to relevant limits such as 75% maximum in equity). Hence moving between All Citizens and the other NPS models can increase or decrease your control over the NPS account.

There are no tax implications of Inter Sector Shifting.

How to do Inter Sector Shifting

Simply fill up the relevant form with your Central Record Keeping Agency (NSDL or Karvy) and submit it to the CRA. If you’ve opened your account through a Point-of-Presence (PoP) such as your bank, you will need to submit it through the bank.

For NSDL subscribers, the form is https://www.npscra.nsdl.co.in/download/government-sector/central-government/forms/IntersectorShifting-Form.pdf

For Karvy subscribers, the form is https://nps.karvy.com/AllCitizensForms/Intersector%20Shifting-Form%20-ISS.pdf

Failure to do Inter Sector Shifting

In this scenario, your old account will continue but can get frozen if you don’t contribute the minimum amount of Rs 1,000 per annum. There is no clarity on whether you can contribute Rs 1,000 or any other amount to old Central/State Government or Corporate Sector NPS accounts after you have left service.

Continuing to contribute to such accounts can also create problems during withdrawal. In case of Central Government, you will need the certification of the relevant department and this may not be given in case of accounts that are ‘kept alive’ in this manner.

It is thus advisable to do inter-sector shifting as soon as you leave service. In all cases, try to do this before the account gets frozen due to non-contribution. A frozen account is not eligible for inter-sector shifting. There is no clarity on whether this type of frozen account can be revived through contributions after you have left the relevant service.

NPS
Author
Neil Borate

Neil Borate is Deputy Editor, RupeeIQ. He can be contacted at neil@rupeeiq.com.