A new initiative regarding child pension was announced in the budget. Giving the option to invest in the National Pension System in the name of children, a new scheme was announced and it has been named as NPS Vatsalya Scheme. Union Finance Minister Nirmala Sitharaman has launched the scheme on Wednesday. Under the scheme, parents will be able to deposit funds to secure their children’s future. This will be changed to NPS by default after the child turns 18 years of age. Let’s get to know the complete details of the scheme.
How much investment is needed
There is an easy option for investment and pension contribution under this plan to ensure the future of children. Investment can start from Rs. 1000 per year under this plan. You can invest as much as you want. The amount deposited enjoys compound interest, so a larger amount can be deposited for the future of your child.
Who can invest?
This long-standing NPS Vatsalya scheme, run by PFRDA, is open to all Indian citizens including NRIs. Legal guardians of minors can also open an NPS Vatsalya account. Minors below 18 years of age with a PAN code can invest in the scheme as per the eligibility criteria.
Vatsalya Program Terms
Funds invested under the scheme can be withdrawn up to three times after a three-year lock-in period. According to the Central Bank of India website, up to 25% of the contributions can be withdrawn three times after a three-year lock-in period for education, serious illness and disability.
For amounts above Rs 2.5 lakh, 80% is used to purchase annuities and 20% can be withdrawn as a lump sum. Meanwhile, amounts up to Rs 2.5 lakh can be withdrawn as a lump sum.
How to open an NPS Vatslya account?
NPS Vatslya accounts can be opened through Points of Access (POPs) of major banks, India Post, pension funds, etc. and through the online platform e-NPS. ICICI Bank said that it has launched the scheme by registering some children’s accounts under NPS Vatsalya. PRAN is also issued for the NPS Vatsalya accounts of new customers. To open an account through online mode – you can use this link.
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