Union Finance Minister Nirmala Sitharaman has launched the NPS Vatsalya scheme, allowing parents to open pension accounts for their minor children. The scheme, announced in the 2024-25 Union Budget, aims to provide long-term financial security for children, with the option to convert accounts to regular NPS upon turning 18. Managed by PFRDA, NPS Vatsalya offers flexible contributions and competitive returns, supporting future pension savings for young subscribers.
NPS Vatsalya for minors
The NPS Vatsalya scheme, unveiled by Finance Minister Nirmala Sitharaman, enables parents or guardians to start pension savings for their minor children. It offers a flexible, long-term investment opportunity for Indian citizens, including NRIs. The pension account will transition to a standard NPS account when the child reaches 18, allowing continuous investment towards future financial security.
Key features
- Eligibility: Minors under 18 with a PAN card can participate.
- Minimum contribution: Rs 1,000 annually, with no upper contribution limit.
- PRAN Card: A unique Permanent Retirement Account Number (PRAN) will be issued to each subscriber.
- Transition to regular NPS: Upon turning 18, the account converts to a regular NPS account with updated KYC details.
How to apply
Parents can subscribe to NPS Vatsalya through banks, post offices, pension funds, or the e-NPS platform. ICICI Bank initiated the scheme's launch at its Mumbai service center, registering new accounts and issuing symbolic PRAN cards to young subscribers.
Partnership and launch
Major banks, including ICICI and Axis, have collaborated with PFRDA to promote the scheme, reflecting the government's commitment to encouraging pension savings from a young age.
NPS Vatsalya: A step towards financial security
NPS Vatsalya offers parents an avenue to save for their children’s future. The scheme ensures pension disbursement only after the subscriber turns 60. Offering competitive returns, NPS has generated 14% in equities, 9.1% in corporate debt, and 8.8% in government securities, making it a viable long-term savings option.
Future enhancements
The government remains open to feedback to refine the scheme further. Financial Services Secretary Nagaraju Maddirala emphasised continuous improvements to address subscriber concerns, ensuring NPS Vatsalya evolves to meet the needs of participants.
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