Ensuring a secure financial future for our children has become increasingly vital. The PFRDA has launched NPS Vatsalya, a specialised scheme tailored for minors. This initiative empowers parents to start saving early while teaching their children the importance of financial discipline.
This article explores the benefits, eligibility, and steps to open an NPS Vatsalya account, as well as withdrawal and investment options.
What is NPS Vatsalya?
NPS Vatsalya is a contributory pension scheme under the National Pension System, regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Announced in the Union Budget 2024-25, this scheme aims to empower children by encouraging them to save for retirement from an early age. The ultimate goal is to build a financially secure society by instilling a habit of planning for the future in children.
Significance of NPS Vatsalya
As parents, we often focus on providing the best education, healthcare, and overall well-being for our children. However, their financial future is just as critical.
Here are a few reasons why NPS Vatsalya stands out:
- a) Long-term Financial Security: NPS Vatsalya helps parents save for their children’s future, ensuring a financial cushion as they grow.
- b) Affordable Contributions: With a minimum contribution of just ₹1,000 per year, the scheme is accessible to families from all financial backgrounds.
- c) Teaching Financial Responsibility: Involving children in the saving process teaches them essential financial planning skills from a young age.
- d) Flexibility for Parents: The scheme allows parents to adjust contributions based on their financial circumstances.
- e) Early Market-Linked Growth: Starting early allows parents to take advantage of market-linked returns, giving investments more time to grow significantly over the long term.
Who Can Enrol in NPS Vatsalya?
NPS Vatsalya is open to Indian citizens under 18. The account must be opened and operated by a parent or legal guardian on behalf of the minor. This means parents can directly support their child’s financial growth by enrolling them in this scheme.
Eligibility Criteria:
- i) The minor must be a citizen of India.
- ii) The guardian opening the account can be a parent or legal guardian.
Steps to Open an NPS Vatsalya Account
Opening an NPS Vatsalya account at is simple. Here’s a quick guide to get you started:
At UTI Pension Fund, we prioritise making the process of opening an NPS Vatsalya account as seamless as possible. Visit any of our branches, and our dedicated team will assist you every step of the way to ensure a smooth account opening experience. Whether you’re new to the process or need guidance, UTI Pension Fund is here to help you get started with ease and efficiency.
Documents Required
To open an NPS Vatsalya Account, you need the following documents:
Proof of the Minor’s Date of Birth:
- Birth Certificate
- School Leaving Certificate
- Matriculation Certificate
- PAN Card
- Passport
Guardian’s KYC Documents:
These include proof of identity and address, such as:
- Aadhaar
- Driving Licence
- Passport
- Voter ID card
- NREGA Job Card
- National Population Register
Investment Options
NPS Vatsalya offers two main investment choices, similar to the NPS All Citizen model:
- a) Auto Choice: Choose from Conservative (LC25), Moderate (LC50), or Aggressive (LC75) Life Cycle Funds, depending on risk tolerance.
- b) Active Choice: Parents can allocate funds across asset classes, including Equity (up to 75%), Corporate Bonds, Government Securities, and Alternate Assets.
Withdrawal and Exit Options
- Partial Withdrawals
Partial withdrawals from the NPS Vatsalya account are permitted under specific circumstances, such as:
- a) Education or medical treatment of the minor
- b) Major illnesses or disability of the minor (over 75%)
- c) Up to 25% of contributions (excluding returns) can be withdrawn after a minimum of three years from account opening.
- Transition After Age 18: Upon reaching 18, the minor’s NPS account will convert to a standard NPS account, pending submission of the necessary KYC documents.
- Exit Upon Maturity
At 18, the minor can exit the scheme. At least 80% of the accumulated amount must go towards an annuity, with the remaining 20% available as a lump sum. If the total corpus is ₹2,50,000 or less, the minor can withdraw the entire amount.
Conclusion
If you’re ready to begin, opening an NPS Vatsalya account with UTI Pension Fund is simple and easy. Start planning today and give your child a gift that will last a lifetime.