Finance Minister Nirmala Sitharaman on Wednesday launched a special version of the popular NPS pension scheme, called NPS Vatsalya, aimed at parents or guardians building a post-retirement corpus on behalf of their minor children with market-linked returns. Launching this pension scheme in nearly 75 locations across the country from the national capital, the finance minister said the implementation of the scheme within a short period of time since it was announced shows the government’s commitment. He also released the scheme brochure and unveiled an online platform for NPS Vatsalya registration.
“NPS Vatsalya is an important step towards the Prime Minister’s vision ‘Viksit Bharat’ (Developed India) … The growth of the nation needs to be accompanied by the faith of the generations. Financial independence is essential to ensure a financially secure and dignified future,” said the finance minister. Read more
He also pointed out that the NPS program is currently maintaining a CAGR of 34 percent, yielding an annual return of 9.5 percent.
State Finance Minister Pankaj Chaudhary said that the under 18 section of the society is the foundation of a Developed India. “Security is an important part of development,” he said.
Describing the NPS Vatsalya scheme as a symbol of financial independence, PFRDA Chairman Deepak Mohanty said that the NPS Vatsalya account will be converted into a regular NPS account once the subscriber reaches 18 years of age.
“This account will continue as the person starts working,” he said.
The launch of the NPS Vatsalya programme, which aims to emphasize the importance of early savings to secure the financial future of children, underlines the government’s commitment to promoting long-term financial planning and security for all.
First announced in the Union Budget 2024-25, which was unveiled on July 23, the NPS Vatsalya program comes with a dedicated online platform aimed at ensuring seamless enrollment in the program.
NPS Vatsalya will not only allow parents to save for their children’s future by investing in a pension account and ensure long-term wealth through the power of compounding but also provide flexible contributions and investment options to investors. The program will accept an investment of up to Rs 1,000 per year in favor of a child, an initiative aimed at ensuring accessibility and ease of access to families from all economic backgrounds.
This scheme will be operated under the Pension Fund Regulatory and Development Authority (PFRDA).
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Here are the important details you should know about the NPS Vatsalya programme:
Who will benefit?
This scheme will favor minors who allow their parents or guardians to build a corpus for their financial needs starting much earlier than a regular NPS account.
This will allow the funds to grow at a higher rate and benefit the child until adulthood.
Lock time
NPS Vatsalya will have a lock-in period—a period during which it will not be granted—for three years.
Early Withdrawal
After exercising the minimum required lock-in period of three years, depositors will be eligible for three withdrawal options, up to 25 per cent of the corpus.
Minimum investment
This scheme will enable parents or guardians to invest as little as Rs 1,000 per year in favor of young subscribers.
What will happen in this story when you are mature?
On attaining the age of 18 years, the beneficiary will have the option to convert the NPS Vatsalya account into a regular NPS account.
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PRAN
At the time of opening the account, the young subscribers will be given permanent retirement account numbers (PRAN) among other details.
Investment Options NPS Vatsalya
The NPS Vatsalya scheme will come with options like variable contributions and investment options.
Documents are required
Those who want to register for the NPS Vatsalya scheme using Aadhaar will need the following:
- Date of birth (DoB) proof of child
- Signature of parent/guardian
- Scanned copy of passport (applicable only for NRI registrants)
- Scanned copy of foreign address proof (applicable only for OCI subscribers)
- Scanned copy of bank proof (applicable only for NRI/OCI subscribers)
Where to open NPS Vatsalya account?
The Minister of Finance said that this program will be available in banks, post offices and the newly launched portals.