A reader asks a question about his son’s NPS account, “He is working as an officer in one of the CPSEs. He has started an NPS account (self) through SBI. Later on his (not immediately) employer started contributing EMPLOYER’s share into the same NPS account. It is only in Tier 1 Status.
“Can he change his NPS fund manager from SBI to some other Fund Manager? Can he now activate Tier 2 account for his contributions? To change the fund manager does he require his employer’s permission”
For NPS other than the government model, you can choose from any of the 10 fund managers. The number of fund managers keep on changing and you can check from this link as to who the latest fund managers are. So yes, if he wishes to, he can change the fund manager from SBI to any of the other fund managers. I have also created a video comparing NPS fund manager performance which you can watch from my NPS Playlist.
The Tier 2 account can be activated at anytime if Tier 1 is activated. But what really is the benefit of investing in Tier 2 account is a question that needs to asked at the moment. The reason for it is that while the investments in Tier 2 account happen akin to the investments in mutual funds, the tax treatment of Tier 2 account is same as that of your normal savings/deposit account.
It means that the earnings or profit in Tier 2 account do not qualify for Long Term Capital Gains and thus you lose out on profits by margins on your investments. This is a big demotivator for anyone planning to invest in the Tier 2 account – I have burnt my fingers as well. The only people who have some motivation to invest in the Tier 2 account are the Government employees who can avail the Tax Saver Scheme and even for them as well there are better avenues available to invest the money.
Coming to the point about the need to take employer’s permission to change the fund manager – so the answer to that is NO. You are the custodian of your money in NPS which was the basic premise with which NPS was setup and basis your risk appetite, you can choose the Fund manager as well as the investment strategy. You need to have the PRAN number and account login details and thus can make the changes all by yourself very easily.
Therefore, try to take charge of your account and also ensure that you perform Portfolio Rebalancing on your account if you have opted for Active mode.