NPS Vatsalya: A New Way to Secure Your Child’s Future

NPS Vatsalya, a brand-new scheme launched on September 18, 2024 by Union Finance Minister Nirmala Sitharaman, is a significant addition to the National Pension System (NPS). The scheme is aimed at helping parents and guardians begin retirement savings for their children from an early age. The NPS Vatsalya is overseen by the Pension Fund Regulatory and Development Authority (PFRDA).

How does NPS Vatsalya work?

• The NPS Vatsalya scheme is overseen by the Pension Fund Regulatory and Development Authority (PFRDA). It is a voluntary scheme, and parents and guardians can choose to invest in it for their children. The minimum investment amount is Rs. 1,000 per month.
• When you invest in NPS Vatsalya for your child, you will need to open a pension account in their name. You will also need to choose a Pension Fund Manager (PFM). The PFM will invest your money in various asset classes, such as equity, debt, and government securities.
• Your child will be able to access the pension corpus when they turn 60. However, they will have to annuitize a portion of the corpus, which means they will receive a regular pension income for the rest of their life.

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Why Choose NPS Vatsalya?

Look at here some benefits of NPS Vatsalya:

• Early Start Advantage: Investing early allows your child’s money to grow over a longer period.
• Tax Benefits: Under Section 80C and 80CCD (1B) of the Income Tax Act, it allows you 100% withdrawal if the corpus is under 2.5 lakh.
• Low-Risk Investment: The PFM’s diversified investment strategy helps mitigate market risks.
• Power of Compounding: The scheme benefits from the power of compounding, which can help investors accumulate a significant retirement corpus over time.
• Government Guarantee: Your child’s pension is backed by the government, providing a sense of security.

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How to Apply?

You can apply for NPS Vatsalya either online or offline:

Online process:

1. Visit the official National Pension System (NPS) website or the dedicated NPS Vatsalya platform.
2. On the homepage for NPS Vatsalya, click the ‘Register’ button to start the procedure.
3. Fill all the necessary information, including details about the minor and the legal guardian.
4. Once the account is created, make an initial deposit of Rs 1,000. After that, the PRAN (Permanent Retirement Account Number) will be generated, officially opening the NPS Vatsalya account under the minor’s name.

Offline process:

Visit a registered Point of Presence (PoP) i.e. major banks, India Post, Pension Fund companies, and other authorised entities to open your NPS Vatsalya account.

Documents required:

• Proof of identity (birth certificate, passport, Aadhaar card) of the child
• Proof of address of the child and parent/guardian
• Parent/guardian’s PAN card
• KYC documents of the parent/guardian

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NPS Vatsalya is more than just an investment plan—it’s a comprehensive solution to ensure your child’s future financial security. As you plan for your child’s future, consider how NPS Vatsalya can fit into your overall financial strategy. It’s a smart, secure, and flexible way to give your child the best start in life—financially and otherwise.

From:
Lingayas Vidyapeeth
Top University in Delhi NCR