Explained: What is NPS Vatsalya, new pension plan for minors
The National Pension System (NPS) Vatsalya scheme for minors will be launched by Finance Minister Nirmala Sitharaman on Wednesday. The scheme was first announced in the Union Budget 2024-25 as part of the government's commitment to "promote early start in securing financial future of children." Sitharaman unveiled an online platform for subscribing to NPS Vatsalya and distributed Permanent Retirement Account Number (PRAN) cards to new minor subscribers at the launch event.
NPS Vatsalya Scheme: An investment for children's future
The NPS Vatsalya Scheme allows parents and guardians to invest in a pension account for their minor children. This initiative aims to ensure long-term wealth accumulation through the power of compounding. The scheme offers flexible investment options, with a minimum annual contribution of ₹1,000 in the child's name, making it accessible to families from all economic backgrounds.
Transition to normal NPS account and scheme management
Once the child reaches the age of 18, the plan can be seamlessly converted into a normal National Pension Scheme (NPS) account. The NPS Vatsalya Scheme will be managed under the Pension Fund Regulatory and Development Authority (PFRDA). According to a Finance Ministry statement, this new initiative marks an important step in India's pension system and highlights the government's commitment to promote long-term financial planning and security for all.
Who are eligible
The scheme is open for all Indian citizens and non-resident Indians (NRIs). Parents can manage their child's account by selecting from a variety of investment options: Default option: Moderate Life Cycle Fund (LC-50) with a 50% equity exposure. Auto choice: Options range from aggressive (LC-75) to conservative (LC-25). Guardians can tailor their fund allocation, with up to 75% equity exposure and a variety of options for corporate debt, government securities, and alternative assets.
