NPSVS

NPS Vatsalya is a contributory saving cum long-term financial security scheme designed exclusively for minors for the purposes of enhancing financial literacy and financial planning and to encourage empowerment of children, emanating from the vision of "Viksit Bharat@2047.

“NPS Vatsalya” Scheme was announced by the Hon’ble Finance Minister in the Union Budget for FY 2024-25. It is designed exclusively for minors below 18 years of age, with the objective of nurturing a culture of savings from an early age, promoting financial literacy, and building a secure financial future for children. The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA) under the PFRDA Act, 2013.

Under this scheme, parents or guardians can open an NPS Vatsalya account for their children and contribute until the child reaches 18 years. The minimum contribution is ₹ 250 per year, and there is no limit on the maximum contribution. NPS Vatsalya fosters early financial planning, disciplined saving, and professional investment of funds dedicated to a child's future financial security, with regulatory safeguards.

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The NPS Vatsalya Scheme offers the following:

Modes of opening an NPS Vatsalya account:

• Physical mode: By visiting any registered PoP - Online facility provided by PoPs- eNPS platform of NPS Trust - Any other electronic mode approved by PFRDA

Contribution:

• Account Opening contribution: Min. ₹ 250/- and Max no limit.
• Subsequent contribution: Min. ₹ 250/- p.a. and Max no limit.

Gift Contribution:

In addition to Parents/guardians, relatives and friends can gift contributions to the NPS Vatsalya account.

Investment

To manage investments of the contributions to the account, parents/guardians can choose any one pension fund (PF) registered with the PFRDA .

Upon Attainment of the age of 18 Years:

• Upon attainment of 18 years of age, the subscriber shall continue under NPS Vatsalya for a period of up to three years (till 21 years), unless the subscriber opts to exit or shift to NPS All Citizen Model or any other applicable model.
• Upon attainment of 18 years of age, the subscriber shall be required to complete fresh KYC, furnish nominee(s) details and any other stipulated details

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Exit and withdrawal from the account:

• For the purpose of education of subscriber, treatment of specified illnesses, disability more than 75%, or the reasons as may be specified by PFRDA in the interest of the minor subscriber, the guardian shall be allowed to partially withdraw up to 25% of subscribers’ contribution excluding returns thereon after minimum 3 years from the date of opening of account. Subscribers/Guardians may take up to 2 partial withdrawals until the subscriber attains 18 years of age. After the subscriber turns 18, upon completion of the prescribed KYC requirements, two additional partial withdrawals are allowed during the period between 18 and 21 years of age. Such a facility shall be made available on a declaration basis.
• In the case of the death of the minor subscriber, the entire accumulated corpus is to be paid to the guardian or nominee(s) or legal heir(s), as the case may be. The recipient shall also have the option to transfer the proceeds to their individual NPS account.
• In case of the death of the guardian registered under the account, another guardian is to be registered on behalf of the minor subscriber by submitting the KYC documents as specified by the PFRDA from time to time.
• In case of the death of both parents, the legally appointed guardian may continue the account with or without making contributions to the account, and upon attainment of 18 years of age by the subscriber, the subscriber shall have an option to continue or exit from the scheme.
• The subscriber shall be allowed to exit only upon attainment of age of 18 years. Upon such exit, up to 80% of the accumulated corpus can be withdrawn as lump sum, and the balance is to be utilised for purchase of an annuity. In case the accumulated corpus is less than ₹ 8 Lakh, the subscriber shall have the option to withdraw the entire accumulated corpus.
• If no option of either exit or shift to NPS is chosen by the age 21, the account automatically shifts to NPS in a higher-equity scheme under Multiple Scheme Framework, under the same Pension Fund and thereafter terms and conditions of NPS shall apply. Withdrawals will only be allowed after KYC is completed.
• The exits and withdrawals under the scheme shall be governed by the provisions of the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pensions System) Regulations, 2015 and amendments thereof.

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• The scheme is available to all Indian citizens who are aged below 18, including Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs)
• The account should be opened by parents/guardian in the minor's name, as they will operate the account exclusively for the benefit of the minor.
• If the guardian is court-appointed, they must submit a copy of the court order confirming the guardianship and KYC documents.
• The guardian must comply with KYC norms as per the Pension Fund Regulatory and Development Authority (PFRDA) requirements.

• Power of compounding along with financial security - Starting early allows money to grow significantly over time through compounding creating a financial cushion for the future.1. Financial discipline: Small, regular investments build a strong habit of saving and planning.1. Empower your child: Early exposure to saving builds responsible financial behaviour for life.1. Tax Efficient - Attractive tax benefits under the Income Tax Act, 1961.1. Optimum Returns - Provides market-linked returns based on pension funds’ performance.1. Transparent - 24/7 online access to the account, with mandatory public disclosures ensuring transparency.