Union Finance Minister Nirmala Sitharaman on September 18, 2024 launched the NPS Vatsalya scheme.
Key features
- The scheme will allow parents to save for their children’s future by investing in a pension account.
- NPS Vatsalya is an extension of the already existing National Pension Scheme to children. It enables parents to open pension accounts for their minor children.
- Parents can subscribe to NPS Vatsalya online or visiting a bank or post office.
- The minimum contribution to open the Vatsalya account is Rs 1,000. Subscribers will have to contribute Rs 1,000 annually thereafter.
- The scheme will be run under the Pension Fund Regulatory and Development Authority (PFRDA).
- Permanent Retirement Account Number (PRAN) cards will be issued to newly registered minor subscribers.
- Children below 18 can open an NPS Vatsalya account, which will automatically get converted to a regular NPS account on completion of 18 years.
- Pension will come from the account only after they turn 60.
- Criteria-The child must be under 18; both the child and the parent/guardian must be Indian citizens and all parties must comply with the Know Your Customer (KYC) requirements.
- NPS Vatsalya account can be opened through Points of Presence (POPs) which include major banks, India Post, Pension Funds, etc.
- Contribution: Make a minimum initial contribution of Rs 1,000, after which families can decide how frequently they want to make further contributions.
- Withdrawal: following a three-year lock-in period, a maximum of three withdrawals of up to 25% of contributions are allowed for reasons including education, a specific disease, or a handicap; upon turning 18 years old, the NPS Vatsalya account will automatically get converted to regular NPS account.
