A frozen NPS account can derail your tax break: Here's why it happens

A frozen NPS account blocks contributions and tax perks, but reactivation is simple, here's the step-by-step process to get it back on track

The National Pension System (NPS) is a popular retirement planning tool. Backed by the government and offering attractive tax breaks, it is popular among both salaried and self-employed individuals. But what many investors are not aware of is that their account can get frozen if certain rules are not followed. A frozen account restricts new contributions, withdrawals, or even basic updates, and can disrupt both retirement planning and tax savings.

 

Why an NPS account gets frozen

According to Pension Fund Regulatory and Development Authority (PFRDA) rules, missing certain requirements can make your NPS inactive. Common reasons include:

 

Minimum contribution lapse: Failure to deposit the required Rs 1,000 annually in Tier I.

 

Incomplete KYC: Incorrect or missing documents during enrolment.

 

Non-submission of forms: Mandatory paperwork not sent to the Central Recordkeeping Agency (CRA).

 

Inactivity: No contributions or transactions for a prolonged period.

 

Suspicious activity: Unauthorised or irregular transactions flagged by the system.

How to unfreez NPS account

Reactivation can be done online or offline.

 

Online process

 

• Log in to the CRA or eNPS portal using your Permanent Retirement Account Number (PRAN). 
• Choose the ‘Contribute Online’ or ‘Unfreeze Account’ option. 
• Make the minimum annual contribution of Rs 1,000 plus a Rs 100 reactivation fee. 
• Confirmation is usually received within a few working days.

 

Offline process

 

• Visit the nearest POP-SP (Points of Presence–Service Provider). 
• Submit Form UOS-S10 along with a copy of your PRAN card. 
• Pay the required contribution and penalty. 
• The CRA updates your account status once processed.

 

Key points to remember

 

-Always contribute at least Rs 1,000 a year to keep the account active.

 

-Set up auto-debits or calendar reminders to avoid missing deadlines.

 

-Tax benefits are linked to contributions; missing a payment can mean losing deductions such as the additional Rs 50,000 under Section 80CCD(1B).

 

-Employer contributions under Section 80CCD (2) remain tax-efficient and can be significant for high-salary employees.

   

An NPS freeze is not permanent, but it can disrupt retirement planning and block tax savings for the year. With a small annual contribution and timely compliance, investors can ensure their NPS account stays active and continues to build long-term wealth.