What is NPS Vatsalya Scheme?

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About NPS Vatsalya Scheme:

It is an extension of the existing National Pension Scheme (NPS) but focuses on children.
Eligibility for NPS Vatsalya as follows
- All minor citizens (age below 18 years).
- Both the child and the parent must be Indian citizens. All parties must comply with the Know Your Customer (KYC) requirements.
- Account can be opened in the name of a minor and operated by parent or guardian. Minor will be the beneficiary.
- Scheme can be opened through various Points of presence regulated by Pension Fund Regulatory Authority of India (PFRDA)such as major banks, India Post, Pension Funds and Online platform (e-NPS).
- Contribution: Subscriber to make a minimum contribution of Rs 1000/- per annum. There is no limit on the maximum contribution.
PFRDA will provide multiple investment choices to subscribers. Subscribers can take exposure in government securities, corporate debt, and equity in different proportions based on risk appetite and desired returns.
On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account.
Withdrawal rules
After three years of opening the NPS vastsalya account, partial withdrawals are allowed. Up to 25% of the corpus can be withdrawn for specific purposes, including education, medical treatment for certain illnesses, or disabilities over 75%.
Once the child attains the age of 18, the corpus of up to Rs 2.5 lakh can be withdrawn entirely and if it exceeds, the 20% can be withdrawn and the rest 80% can be used for annuity purchase in the NPS.
In the unfortunate event of a subscriber’s death, the entire corpus is given to the nominee, usually the guardian. If the guardian dies, a new guardian must be assigned after completing a new KYC.
If both parents die, a legal guardian can manage the account without further contributions until the child turns 18.

Q1: What is the National Pension System (NPS)?

It is a retirement benefit scheme introduced by the Government of India to facilitate regular income post-retirement for all subscribers. It was launched on 1st January, 2004. Initially, NPS was introduced for the new government recruits (except the armed forces). With effect from 1st May, 2009, NPS has been provided for all citizens of the country, including the unorganised sector workers on a voluntary basis.

Source: NPS Vatsalya launched for kids: Know investment amount, eligibility, & more