How to Invest in NPS Vatsalya | Eligibility and Guide

NPS Vatsalya: How to Invest, Eligibility Criteria, and Online Buying Guide

The NPS Vatsalya scheme is a crucial tool for ensuring a secure financial future for children. This plan enables parents or guardians to open a pension account for minors with a minimum annual contribution of ₹1,000, making it accessible to families across different economic strata. The scheme was launched by Union Finance Minister Nirmala Sitharaman, and it comes with an easy-to-use online platform for account management.

Under NPS Vatsalya, parents or guardians can open a pension account for minors, providing long-term financial security. Managed by the Pension Fund Regulatory and Development Authority (PFRDA), it allows families to start saving early, benefiting from the power of compounding over time.

With a flexible investment structure, parents can begin contributing with as little as ₹1,000 annually, ensuring their child’s financial future is secure by the time they reach adulthood.

Withdrawal, Exit, and Death Rules
As per the Central Bank’s website, the NPS Vatsalya scheme allows withdrawals after a three-year lock-in period, permitting up to 25% withdrawals for education, illness, or disability, with a maximum of three times allowed.

Once the minor turns 18, the account transitions into an NPS Tier-I account. If the total savings exceed ₹2.5 lakh, 80% must be used to purchase an annuity, while 20% can be withdrawn as a lump sum. For amounts under ₹2.5 lakh, the entire corpus can be withdrawn. In the case of the minor’s death, the full corpus is returned to the guardian.

How to Open an NPS Vatsalya Account
The NPS Vatsalya account can be opened both online and offline. Parents can visit designated Points of Presence (PoPs) like banks, India Post offices, and pension fund offices. Alternatively, the account can be opened online through the e-NPS platform, making it even more convenient.

Investment Choices in NPS Vatsalya
The NPS Vatsalya scheme offers a variety of investment options. Guardians can choose a pension fund registered with the PFRDA. Available investment strategies include:

• Default Choice: Moderate Life Cycle Fund (LC-50), where 50% is invested in equities.
• Auto Choice: Three life cycle fund options:
  • Aggressive LC-75 (75% equity)
  • Moderate LC-50 (50% equity)
  • Conservative LC-25 (25% equity)
• Active Choice: Guardians can actively allocate investments, with up to 75% in equity, 100% in corporate debt, 100% in government securities, and up to 5% in alternative assets.

Aakhir Tak Editor-in-Chief

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