PFRDA: Guaranteeing a secure future for children! PFRDA releases NPS Vatsalya Guidelines..
Every parent dreams of securing their child's future, whether it's for their education or other life needs. To turn this dream into reality, the government introduced the 'NPS Vatsalya' scheme. Now, the Pension Fund Regulatory and Development Authority (PFRDA) has released new guidelines for this scheme for 2025.
NPS Vatsalya was announced in the 2024-25 budget and launched in September 2024 by Finance Minister Nirmala Sitharaman. It has now been made even clearer and simpler so that every family in the country can lay the foundation for their children's pension from today.
Who can open an account, and what are the eligibility criteria?
The best thing about this scheme is its inclusivity. Any Indian citizen, whether residing in India, an NRI (Non-Resident Indian), or an OCI (Overseas Citizen of India) cardholder, can open this account for their child. The only condition is that the child must be under 18 years of age.
The account will be opened in the child's name, and they will be the sole beneficiary. However, until the child reaches adulthood, the account will be managed by their parents or legal guardian.
Start with just Rs. 250
Often, people think that pension schemes require a large investment, but NPS Vatsalya has broken this misconception. You can open this account with an initial investment of just Rs. 250. After that, you only need to deposit a minimum of Rs. 250 every year.
There is no limit on the maximum investment; you can deposit as much as you want according to your capacity. Another special feature is that the child's relatives and friends can also contribute to this account as a 'gift,' which will become their future capital.
Choose your preferred Pension Fund.
When you invest money, the question of who will manage it naturally arises. Several pension funds registered with PFRDA are available. Parents can choose any one of the top-performing pension funds at their discretion. This flexibility gives investors the freedom to make decisions based on their risk appetite and return expectations.
Withdrawals are possible when needed.
Having a pension scheme doesn't mean your money will be completely locked away. According to the new guidelines, you can make partial withdrawals after three years of opening the account. You can withdraw up to 25% of your total contributions (excluding profits).
These withdrawals can only be made for specific reasons, such as higher education for the child, treatment of a serious illness, or in case of a specific type of disability. The child can make two withdrawals before turning 18 and two more between the ages of 18 and 21.
What happens when the child turns 18?
As soon as the child becomes an adult, i.e., turns 18, they will first have to complete their new KYC (Know Your Customer) process. After that, they will have several options. They can continue with the account. They can convert it into a regular 'NPS Tier-1' account. And if they want to exit the scheme, they will have to invest at least 20% of the total accumulated amount in an annuity (for pension) and can withdraw the remaining 80% as a lump sum. However, if the total accumulated capital is ₹8 lakh or less, they can withdraw the entire amount at once.
The scheme will reach every village.
The government does not want to limit this scheme to cities only. Therefore, the new guidelines include a decision to involve Anganwadi workers, ASHA workers, and Bank Sakhis in this initiative. They will be encouraged to spread awareness and connect people with this scheme in rural and semi-urban areas. This will help in achieving the goal of 'Developed India@2047'.
Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.
