Nirmala Sitharaman, the Union Finance Minister, has introduced NPS Vatsalya, a retirement account specifically for kids. Along with launching an online subscription portal for NPS Vatsalya, the Finance Ministry also provided newly enrolled minor subscribers with a Permanent Retirement Account Number (PRAN).
With this new programme, India’s retirement system will improve significantly and children’s financial futures will be secured from an early age. The scheme’s administration will be supervised by the Pension Fund Regulatory and Development Authority (PFRDA).
What is Vatsalya NPS?
With the help of NPS Vatsalya, parents may invest in retirement accounts and use compound interest to secure long-term prosperity for their children. Families from various economic backgrounds may contribute Rs 1 lakh yearly on behalf of their kids using NPS Vatsalya’s varied contribution options and investment possibilities.
NPS Vatsalya Death, Withdrawal, and Exit
According to the Central Bank of India website, following a three-year lock-in period, withdrawals of up to 25% of contributions are allowed for disability, education, and certain illnesses. No more than three times.
- Easy transfer to NPS Tier-I (All Citizen) upon completion of 18 years.
- Exit possible after eighteen years: If the corpus exceeds Rs 2.5 lakh, 80% of it would be utilized to buy an annuity, with the remaining 20% being available for lump sum withdrawals.
- Assets up to but not including Rs 2.5 lakh. You can take out the full debt in one single payment.
- The guardian will receive back the full asset in the event of death.
Where Can I Open an Account?
Points of Presence (POPs), such as major banks, the Indian Post Office, pension funds, etc., and the internet platform e-NPS, are the two ways to create an NPS Vatsalya account.
We are launching the NPS Vatsalya plan today for minors. You can create an account through the program for the safe future of your child. This PFRDA-regulated program provides a variety of investment options and early NPS advantages. Give your kids a solid financial foundation! In an SMS to NPS investors, CAMS stated, “Open the account for your child at https://app.camsnps.com/CRA/auth/enps/iegister?source=eNPS – CAMS CRA.”
According to an ICICI Bank press release, the Vatsalya NPS account has the following important features:
- Any minor under the age of eighteen who possesses both an Aadhar card and a PAN card is eligible.
- Minimum contribution: There is no upper restriction on the maximum contribution; the minimum contribution is Rs 1,000 annually.
- Contributors to the scheme: Contributions on behalf of children can be made by parents and guardians.
Transition upon turning eighteen: Upon submission of the necessary KYC documentation, the minor’s NPS account will be transformed into a regular NPS account.
Required Documentation To Access NPS-Vatsalya
KYC of the guardian through the provision of proof of address and identity.
- Documentation proving the minor’s birthdate
- The minor’s NRE/NRO bank account, either joint or single, if the guardian is also an NRI.
- Choosing investments: Any pension fund that is registered with the PFRDA may be selected by a guardian.
