NPS Vatsalya – Building a Strong Financial Future for Your Child

In 2024, the Government of India introduced the NPS Vatsalya Scheme for Indian citizens who are below 18 years old. This scheme allows parents to contribute a specific amount on behalf of their children to secure their future and help them develop a retirement fund. In this blog, we’ll explore more about the this scheme.

NPS Vatsalya Scheme – An overview

The Pension Fund Regulatory and Development Authority of India (PFRDA) administers this scheme. The NPS Vatsalya scheme is a new variant of the existing National Pension System, designed specifically for young individuals below 18 years of age. Its primary objective is to cultivate a habit of retirement savings and promote long-term financial security from an early stage in life. Guardians or parents can open NPS Vatsalya accounts on behalf of their children and contribute towards their retirement savings. Under this scheme, parents or guardians will act as nominees, while the child will be the sole beneficiary.

Features of the NPS Vatsalya Scheme

• Develop an Early Investing Habit: This Scheme allows parents or guardians to open an account for their minor children, making them the sole beneficiaries. The account will be managed by the guardian exclusively for the child’s benefit until the child turns 18. Upon reaching 18 years of age, the account will be transferred to the child’s name, allowing them to continue managing it with the accumulated corpus.
• Transfer of Funds: Once the minor turns 18, the account will remain active and will be transitioned into an NPS Tier-1 Account under the All Citizen Model, or can be moved to another non-NPS scheme account. The Central Recordkeeping Agency (CRA) will issue a unique Pension Retirement Account Number (PRAN) in the child’s name.
• Low Investment Amount: The minimum annual contribution to this Scheme is Rs. 1,000, with no upper limit on the maximum contribution. The initial enrollment contribution is also Rs. 1,000. The scheme provides options for partial withdrawals and account exit.

Click here to know how retirement planning and NPS are related to each other.

Who is Eligible for the NPS Vatsalya?

1. Any Indian citizen who is below 18 years of age.
2. NRIs and OCI individuals below 18 years of age.
3. Parents or guardians can open and operate the account on behalf of the minor.

Final Thoughts

The NPS Vatsalya scheme is an excellent initiative to promote financial security and encourage early retirement savings for children. By allowing parents or guardians to open an NPS Vatsalya account on behalf of their children, this scheme provides a head start in building a strong retirement corpus from a young age. With its low minimum contribution requirement, flexible withdrawal options, and seamless transition when the child turns 18, NPS Vatsalya serves as a valuable tool for ensuring financial stability in the future. Beyond fostering early investment habits, it also plays a crucial role in securing long-term financial well-being.

Open an NPS Vatsalya account today!