NPS Vatsalya Scheme
Pension Fund Regulatory and Development Authority (PFRDA) has released the official guidelines for NPS Vatsalya Yojana 2025 with the aim of strengthening the long-term financial security of children. This scheme has been specially designed for children below 18 years of age, so that their future can be made financially secure.
NPS Vatsalya Yojana was announced in the Union Budget for the financial year 2024-25 and was launched by Finance Minister Nirmala Sitharaman on 18 September 2024. The objective of the scheme is that parents or legal guardians can start regular savings for their children from an early age, which will become a strong base for pension in future.
Who can open an account
Under this scheme, any Indian citizen below 18 years of age can open an account. This also includes NRI and OCI children. The account will be opened in the name of the child, but it will be operated by the guardian. The child will be the only beneficiary in the scheme.
Investment convenience and flexibility
The minimum initial and annual contribution in NPS Vatsalya account has been kept at only ₹ 250. There is no limit on maximum investment. The special thing is that apart from parents, relatives and friends can also deposit money in the child’s account as a gift.
What will be the options after 18 years
When the child turns 18, it will be necessary to get a new KYC done. After this, till the age of 21 years, the account holder will have three options to continue the scheme, shift to NPS Tier-I account or exit the scheme. If the total deposit amount is ₹ 8 lakh or less, the entire amount can be withdrawn.
Taxpayers will get big relief
Tax experts believe that if the limit of additional tax exemption available in NPS is increased to Rs 1 lakh or more, then middle income taxpayers earning Rs 8 to 15 lakh annually can get additional tax savings of Rs 10,000 to Rs 21,000. This benefit will not be limited to just saving tax, but it will also increase people’s pension fund rapidly and strengthen their financial security after retirement.
You can withdraw 80 percent of the amount in lump sum
According to PFRDA, under the new rules, the facility of partial withdrawal has now become more flexible. Members will be able to withdraw money twice before the age of 18 years and twice between the age of 18 and 21 years, although certain conditions will apply for this. As per the earlier rules, partial withdrawals were allowed only a maximum of three times till the age of 18 years.
Important changes have also been made regarding withdrawal options. Now if the account holder wishes, he can transfer his account to NPS Tier-1 (All Citizen Model or other applicable model). Apart from this, there will also be an option to withdraw up to 80% of the total deposited amount in lump sum, while it will be necessary to buy annuity for pension with at least 20% of the amount. If the total amount deposited in a member’s account is less than Rs 8 lakh, then he will also get the facility to withdraw the entire amount at once.
Awareness raising initiative
The government has also decided to include Anganwadi workers, Asha workers and Bank Sakhis with this scheme, so that more and more people in rural and semi-urban areas can avail the benefits of this scheme. Overall, NPS Vatsalya Yojana is being considered an important step towards inculcating the habit of saving among children, increasing financial understanding and making the country economically strong.
To open NPS Vatsalya Yojana, you can apply online (through the eNPS portal) or offline (through a point of presence POP like a bank or India Post), which requires documents like Aadhaar/PAN of the guardian and birth certificate of the minor, complete the registration with a minimum initial investment of Rs 250 and get the PRAN number.
How to open NPS Vatsalya account
online process
- Visit the portal: Visit a website like NPS Trust (npstrust.org.in) or SBI Pension Funds (sbipensionfunds.co.in) and select ‘Open NPS Account’.
- Select CRA: Select the Central Recordkeeping Agency (CRA) of your choice.
- Fill details: Fill the details of minor and guardian and do Aadhaar-based eKYC.
- Upload Document: Upload required documents (like Aadhaar, birth certificate).
- Make Payment: Make initial payment of ₹250 or more and authenticate with OTP.
- GET PRAN: Your PRAN (Permanent Retirement Account Number) will be generated and you will get the login ID.
offline process
- Go to PoP: Collect the application form from any registered Point of Presence (PoP) like bank or India Post.
- Fill the form and submit the documents: Fill the form and submit it along with the required documents (see below).
- Payment and Activation: Make minimum payment of ₹250 and activate account.
- Documents Required (For Parents/Guardians): Aadhaar/PAN/Driving License/Passport (for identity and address proof), PAN Card