News | Retirement

You Can No Longer Make Contributions to NPS Tier II Accounts Using Credit Card

MAS Team 05 August 2022
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The Pension Fund Regulatory and Development Authority (PFRDA) has decided to stop accepting payment of subscriptions/contributions by using credit cards as a mode of payment in the National Pension System (NPS) Tier-II account. The regulator has instructed all Points of Presence (PoPs) to immediately stop accepting credit cards for payments to NPS Tier II accounts.
 
In a circular dated 3 August 2022, the PFRDA said, “The Authority has decided to stop the facility of payment of subscriptions/contributions using credit card as a mode of payment in the Tier-II account of NPS. Accordingly, all PoPs are advised to stop the acceptance of credit card as a mode of payment for the Tier-II account of NPS with immediate effect.”
 
The regulator said it has taken the decision to stop the use of credit cards in NPS Tier-II accounts in the exercise of the powers conferred under Section 14 of Pension Fund Regulatory and Development Authority Act 2013 “to protect the interests of subscribers and to regulate, promote and ensure orderly growth of the national Pension System and pension schemes to which the Act applies.”
 
NPS has been the only saving instrument that allowed account holders to invest using their credit cards through the eNPS portal. While the credit card payment facility is still available for the NPS Tier-I account, you cannot make a contribution to the NPS Tier-II account using your credit card.
 
The usage of credit cards for payments to investment scheme such as mutual funds or stocks etc. are generally not encouraged due to fear of over-leveraging on high-interest money. Credit card users have to pay 0.60% (excluding GST) as a payment gateway charge for contributing to NPS with a credit card through net banking.
 
NPS Tier II account is a voluntary account that a subscriber can open if s/he has an NPS Tier I account. The Tier-II account has flexible withdrawal and exit rules. Also, contributions to the NPS Tier II account don’t qualify for any tax exemptions.
 

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Changes in Our Business Model
 
 
25th Sept 2020
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
What remains the same:
  • Recommendations on insurance, investment and Lion stocks, will continue as a part of the MAS premium subscription. Our strength has always been research and this will remain available to you through our recommendations.
  • The magazine and all textual content will remain as part of the service
  • We will have to suspend the restructuring tool.
 
What changes:
  • The interactions in Ask / Handholding will offer investment advice but not specific to your situation. It will offer information on investment products and also clarify your doubts about various financial products. It will be a forum for information, not for advice. This will be implemented with immediate effect and our guidelines in Ask, reflect this now.
 
Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
 
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Debashis Basu
Founder