Can An Unemployed Person Open An NPS Account?

The National Pension System (NPS) is a popular retirement planning tool in India. The social security scheme is available not only to resident Indians but also to non-resident Indians (NRIs). Its coverage ranges from government employees, corporate sector workers, self-employed individuals, and even those who are not working or unemployed.

As of February 1, 2025, the NPS reported a one-year return of approximately 10.89 per cent and a three-year return of 13.71 per cent from equities.

As the senior population is projected to reach around 20 per cent by 2050, the dependency ratio of elderly people on the younger population will increase. This broader perspective highlights the urgent need to save for the long term.

NPS deals with the question. It is a flexible scheme allowing even those who are not employed to invest. Let us check the details.

Can An Unemployed Person Invest In NPS?

Ranbheer Singh Dhariwal, chief executive officer, Max Life Pension Fund, says, “Yes, employment status is not a requirement for opening an NPS account. An individual can contribute to NPS as long as they have funds to do so. The account requires a minimum annual contribution of Rs 1,000, with each individual contribution amounting to at least Rs 500. Given the relatively low contribution amounts, an unemployed or non-working person can open and maintain an NPS account without difficulty”.

So, even if a person does not have a source of income can open an NPS account with the funds already saved. Unlike employees’ provident fund (EPF), which stops when one leaves a job, NPS can be continued under the all-citizen model.

Is A Third Party Allowed To Invest In NPS?

Dhariwal states, “No, third-party deposits are not permitted in NPS as per PMLA (Prevention of Money Laundering Act) guidelines. This restriction is in place to reduce the risk of fraudulent transactions. It is essential for every NPS account holder to have their own bank account, regardless of whether they are currently earning”.

Bertram D'souza, Chief Product & Innovation Officer, Protean eGov Technologies Ltd, agrees while saying, “Yes, unemployed or non–working person or self-employed person can open NPS account under the Unorganised Sector. But third-party payment is not allowed in NPS as is the case with every financial/insurance or banking product”.

Rajesh Khandagale, Senior Vice President, National Pension System, KFin Technologies, says, “Third-party contributors are individuals who are not related to the NPS account holder. They can make contributions to the account, as permitted under the PMLA guidelines”.

For A Non-Earning Housewife With No Other Source Of Income, Can Her Husband Or Family Member Make NPS Deposits On Her Behalf?

D’souza says, “Husband or family member can contribute on her behalf in NPS. There is no limit on such contributions”.

Dhariwal explains, “The contribution can come from the wife’s (subscriber’s) source of funds only, as per KYC/AML guidelines. While there is no specific limit, the contribution must comply with the subscriber's financial source”.

While third-party investment is not allowed in the NPS account, and family members are not considered third parties, a husband can invest on behalf of his wife.

According to the Pension Fund Regulatory And Development Authority (PFRDA) circular dated January 23, 2023, “Reporting entity shall identify the source of contribution and ensure that the contribution is being done through the subscriber’s source of funds”.

So, even if a person is unemployed or non-working for some time, reporting entities are responsible for keeping a regular check on the contribution and following ongoing due diligence on a subscriber’s contributions. Any contribution inconsistent with the normal might catch their attention, and they can take the necessary action against it.

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