NPS Vatsalya Scheme
This scheme is not just a means of saving, but is a long-term money making plan for children, which has both flexibility and some strict rules. When Finance Minister Nirmala Sitharaman launched the NPS Vatsalya Scheme in September 2024, the aim was to help parents quickly start creating a retirement fund for their children. This scheme has been designed by the Pension Fund Regulatory and Development Authority.
As soon as the child turns 18, this account automatically converts into regular NPS (Tier-I). There is no need to open a new account and compounding continues.
The child gets 3 years. During this time he can withdraw 20% of the money, the remaining 80% will go to the pension plan. If nothing is done, the money goes into riskier options.
If the total deposit is less than Rs 8 lakh, the entire money can be withdrawn. If it exceeds this, rules will apply and some part will go to pension.
After 3 years, up to 25% of the money can be withdrawn, that too only for education, illness or major need. Withdrawal is possible only maximum 2 times before 18 years of age.
The parents manage the account, but the money entirely belongs to the child.
Apart from parents, relatives and friends can also contribute, like on birthdays or festivals.
You can start with just Rs 250 a year, but the more and sooner you invest, the more benefit you will get.
In this scheme, up to 75% of the money can be invested in the stock market, due to which there is a possibility of getting better returns in the long term. NPS Vatsalya Scheme is a smart way to build a strong long-term financial future for children, with a balance of growth and discipline.
