What is NPS Vatsalya Scheme? FM Nirmala Sitaraman Launches Child Pension Yojana

'माता पिता च बालकस्य वात्सल्येन सदैव पोषणं कुर्वन्ति', parents always nurture their child with affectionate care, ensuring that the child grows up in a loving and supportive environment.

Every parent wants that the future of their children is secure, whether financially, emotionally, or socially. But the financial part plays a pivotal role. No one knows what the future holds, and therefore the parents work hard to provide a stable financial foundation for their children to thrive and succeed in life.

The NPS Vatsalya is the central government's new pension scheme for children where parents can invest in their child's future financial security, ensuring that their children have a stable and secure future ahead.

This scheme allows parents to contribute towards their child's pension fund, providing them with a safety net for the future. It was announced in the 2024–25 Union Budget scenario, and according to the Finance Ministry, it has been launched today, i.e., September 18, 2024.

Related Stories: NPS Vatsalya Scheme: लाभ, पात्रता, जरुरी डॉक्यूमेंट और आवेदन प्रक्रिया की सभी डिटेल्स यहां देखें

About the Launch of NPS Vatsalya Scheme

According to the Finance Ministry, Finance Minister Nirmala Sitaraman introduced the NPS Vatsalya today to help children in need across the country. 

Introduced in the Union Budget 2024-25, NPS Vatsalya is a new initiative under the National Pension System designed for long-term investments by parents and guardians on behalf of their minor children.

The Pension Fund Regulatory and Development Authority (PFRDA) manages the scheme, which aims to assist families in planning for their children's financial future as early as possible.

The opening events were organised at 75 different destinations, with other locations joining the conference through video conference and distributing PRAN membership to new minor subscribers in their respective areas.

Schoolchildren also attended the event, where they participated in interactive sessions to learn about the benefits of NPS Vatsalya. NPS Vatsalya represents a significant step in enhancing the country's pension system and promoting early financial planning for children.

NPSC Vatsalya Mission: All You Need to Know

Finance Minister Nirmala Sitharaman will launch the NPS Vatsalya scheme today, September 18, 2024. Key features of NPS Vatsalya include:

• Accessible to Indian citizens and NRIs, with accounts opened by legal guardians in the child's name.
• For NRI and OCI subscribers, contributions can be made from their NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts.
• After the minor reaches 18 years of age, the NPS Vatsalya account is converted into a regular NPS account.
• Minimum annual contribution of ₹1,000, with no upper limit
• Investment choices like Default (50% equity), Auto (25-75% equity), and Active (up to 75% equity)
• Partial withdrawals allowed after 3 years for education, health, and disability up to 25% of corpus
• Account converts to regular NPS at 18, with option to continue or withdraw (20% lump sum, 80% annuity if corpus >₹2.5 lakh).

How to open NPS Vatsalya's online platform (eNPS)?

To open an NPS Vatsalya account online, follow these steps:

• Visit the eNPS Portal: Go to the official eNPS website, which will host the NPS Vatsalya scheme.
• Select the NPS Vatsalya Option: Look for the option to apply for the NPS Vatsalya scheme specifically designed for minors.
• Complete Registration: Fill out the necessary details, including the minor's information and guardian's KYC details.
• Upload Documents: Provide required documents such as proof of identity and address for the guardian and proof of age for the minor.
• Make Initial Contribution: Ensure a minimum annual contribution of ₹1,000 is made during registration.
• Receive PRAN Card: After successful registration, a Permanent Retirement Account Number (PRAN) card will be issued for the minor subscriber.

You can also open an account through Points of Presence (POPs), including banks and India Post.

What documents are required to open an NPS Vatsalya account?

To open an NPS Vatsalya account, the following documents are required:

• Proof of Identity for Guardian: This can include an Aadhaar Card, PAN Card, Passport, or Driving Licence.
• Proof of Address for Guardian: Any official document that verifies the current address.
• Proof of Age for Minor: A Birth Certificate or any government-issued document that confirms the date of birth of the child.
• Identity Proof for Minor: An Aadhaar Card is recommended if available.
• Contact Information: A valid mobile number and email ID for registration and communication.
• Photographs: Recent passport-size photographs of the guardian.

Benefits of NPS Vatsalya Scheme

Opening an NPS Vatsalya account offers several benefits for securing a child's financial future:

• Early Savings: Parents can start saving for their child's retirement from infancy, instilling financial discipline and responsibility early on.
• Compounding Growth: The scheme leverages the power of compounding, allowing investments to grow significantly over time, which can lead to a substantial corpus by the time the child turns 18.
• Flexible Contributions: The minimum annual contribution is just ₹1,000, with no upper limit, making it accessible for families across different economic backgrounds. Contributions can be as low as ₹500 per month.
• Diverse Investment Options: Parents can choose from various investment strategies, including default, auto, and active choices, allowing them to tailor the investment approach according to their risk appetite.
• Partial Withdrawals: After three years, parents can withdraw up to 25% of the corpus for specific needs like education or medical expenses, providing financial flexibility when needed.
• Seamless Transition: Upon reaching adulthood at 18 years, the NPS Vatsalya account converts into a regular NPS account, ensuring continued growth and availability of funds for future needs.
• Security for Guardians: In case of the guardian's demise, the entire corpus is returned to the registered nominee, ensuring financial security for the child.

NPS Vatsalya Scheme: Interest Rate

The interest rate of Mission Vatsalya is approximately ranges from 10% to 14% yearly return. This means if you deposit ₨.1000 per month for the next 20 years for your 3-year-old child at an interest rate of 14%, you can expect a return of over ₨.60,00,000 at the end of the term. This makes Mission Vatsalya a great option for long-term savings for your child's future education or other expenses.

NPS Mission Vatsalya Calculator

Before investing in any scheme, it is crucial to know the EMI rates and the interest rate so that you can calculate the total amount you'll receive over time.

This will help you make an informed decision about whether the investment is worth it in the long run and if it aligns with your financial goals.

The NPS Vatsalya calculator helps you determine how much you need to invest to achieve your desired retirement corpus, making it easier to plan for the future. Additionally, it allows you to compare different investment options and choose the one that best suits your needs and objectives.

To calculate the NPS Vatsalya Scheme EMI, applicants can open the calculator available at https://www.camsnps.com/.