NPS Vatsalya: Where and how to open NPS Vatsalya account, how much investment will be required - know the answers to all the questions

Under the NPS Vatsalya scheme managed by PFRDA, parents will be able to deposit money to secure the future of their children, and when the child becomes an adult, he can convert it into a normal NPS account. Let us now tell you the answers to all kinds of questions related to NPS Vatsalya.

NPS Vatsalya Yojana has been launched with the aim of securing the future of children...

In the full budget for the financial year 2024-25 presented in July due to the general elections this year, Union Finance Minister Nirmala Sitharaman announced a pension scheme for young children, which was named NPS Vatsalya . This scheme, started under the National Pension System, i.e. NPS or National Pension System, was launched on Wednesday, i.e. 18 September.

Under NPS Vatsalya, managed by Pension Fund Regulatory and Development Authority (PFRDA), any parent will be able to deposit money for the purpose of securing the future of their child or children, and when the child becomes an adult, i.e. turns 18, he can convert it into a normal NPS account. So let us now tell you the answers to all kinds of questions related to NPS Vatsalya.

What is the minimum investment required in NPS Vatsalya...?

Investment in NPS Vatsalya can be started with ₹1,000 annually, but there is no maximum investment limit. Compound interest will be paid on the amount deposited in the account. After the account is opened, the subscriber will have to invest at least ₹1,000 every year.

Who can open NPS Vatsalya account...?

NPS Vatsalya Yojana is an extension of the existing NPS scheme, through which young children have been included, but they will get pension only when they also reach the age of 60 years. Every Indian can open an account in this long-term pension scheme, provided his children are currently minors. Apart from parents, the legal guardian of the minor child also has the right to open an account. But the only condition is that every person including the account holder minor should be KYC compliant.

When and how can money be withdrawn from NPS Vatsalya account...?

This scheme, which provides protection against uncertainties of life and long-term financial security, can be withdrawn before maturity as well, although the guidelines for withdrawal from the accounts are being finalized at present. However, it has been decided that the amount invested in the scheme can be withdrawn a maximum of three times after a lock-in period of three years before the account holder attains majority, and only 25 percent of the invested amount will be allowed to be withdrawn. This withdrawal will be possible only for pursuing education, treatment of select diseases and in case of more than 75 percent disability.

What will happen when the NPS Vatsalya account holder becomes an adult...?

After the account holder attains majority, within three months, the account holder will have to go through the KYC process again and convert the account into a normal NPS account. At this time, the account holder will have the option to close the account, but the restriction will be that he will have to buy annuity with at least 80 percent of the total deposit amount (invested amount and interest earned on it), while the remaining 20 percent can be withdrawn in lump sum. Account holders whose total deposit amount is less than ₹ 2,50,000 will be able to withdraw the entire amount in lump sum.

Where and how can NPS Vatsalya account be opened...?

NPS Vatsalya account can also be opened by visiting post offices, major banks, and it  can also be opened online through e-NPS . ICICI Bank  launched the scheme on Wednesday and opened NPS Vatsalya accounts for some children. The bank also distributed symbolic Permanent Retirement Account Number (PRAN) to those children for their NPS Vatsalya account. Apart from ICICI Bank, Axis Bank has also joined hands with PFRDA for the NPS Vatsalya scheme.

What if the NPS Vatsalya account holder or guardian dies...?

• On death of the account holder: The entire deposit amount (invested amount and interest earned) will be returned to the guardian (or parents), as the nominee of the account is the guardian.
• In case of death of the guardian: The other guardian will be registered after doing fresh KYC.
• On death of both parents: The legal guardian can continue the account without making any investment until the account holder turns 18 years of age.