NPS Vatsalya Scheme Launch Today: NPS Vatsalya is a new pension program specifically for minors. Parents and guardians can spend as little as ₹1,000 annually in their child’s future, making it affordable for families of all economic levels.
Finance Minister Nirmala Sitharaman will launch the much-awaited NPS Vatsalya Scheme on Wednesday, September 18. This project, announced in Budget 2024, seeks to financially safeguard children’s futures by encouraging guardians to invest in pension accounts on their behalf. The plan will be introduced at 3 p.m. in New Delhi, with 75 places participating virtually.
What is The NPS Vatsalya Scheme?
National Pension System (NPS) Vatsalya scheme is a full form of a new pension program specifically for minors. Parents and guardians can spend as little as ₹1,000 annually in their child’s future, making it affordable for families of all economic levels.
The scheme’s goal is to produce wealth through long-term investments that leverage compounding. As part of their enrollment in the National Pension System (NPS), children will obtain PRAN cards (Permanent Retirement Account Numbers).
Key benefits of the NPS Vatsalya Scheme
- Protection against uncertainty and long-term financial security
- Teaching financial responsibility (concept of pension planning)
- Encouragement for long-term investment
- Flexibility in future financial planning
- Benefits of compound interest with long-term investment
NPS Vatsalya Scheme Eligibility
Indian citizens can set up an NPS Vatsalya account for their children. Guardians of minors are also eligible. Once the child reaches 18, the account can be simply transformed into a conventional NPS Tier-I account.
NPS vatsalya scheme features
Parents can manage their child’s account by selecting from a variety of investment options:
Default choice: Moderate Life Cycle Fund (LC-50) with 50% equity exposure.
Auto Choice: Select between Aggressive (LC-75) to Conservative (LC-25).
Active Choice: Guardians can tailor fund allocation, with up to 75% equity exposure and a variety of corporate debt, government securities, and alternative assets.
Contributions start at ₹1,000 per year and are unlimited.
Death and succession rules of the NPS Vatsalya Scheme
In the event of a subscriber’s death, the full corpus is returned to the guardian, who is the registered nominee.
If the guardian passes away, another guardian can be appointed using a new KYC. If both parents die, a legal guardian can continue to contribute or wait until the kid reaches the age of 18 before making any further investments.
After turning 18
When the child reaches adulthood, the NPS Vatsalya account becomes a conventional NPS Tier-I account. Key possibilities include:
Continuing the account: Subscribers can continue investing after 18 years with a new KYC within three months.
Exiting NPS: Subscribers can exit by reinvesting 80% of their funds in an annuity plan and taking 20% as a lump amount.
If the total corpus is less than ₹2.5 lakh, you can withdraw the entire amount.
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