NPS Vatsalya

NPS Vatsalya is a retirement scheme exclusively designed for minors in India. Our finance minister, Nirmala Sitaraman, mentioned this scheme in her speech for the budget 2024. The scheme launched on 18 September 2024. 

In this scheme, parents start investing in their children before they turn 18. This scheme has many other advantages, including securing your kids’ future. Stay with us until the end to get answers to every question that might be roaming around in your mind. 

Here we will break down features, needed documents, eligibility criteria, and how you can invest. Withdrawal and exit rules, and lastly the benefits in the easiest forms, so let’s check it out,

Features Of NPS Vatsalya

To know more about this great scheme by the government, you must be aware of the features first,

1. For the minor children, parents need to open this NPS Vatsalya scheme. But the sole beneficiary will be your children. 
2. After the minor becomes 18 the account will be transferred to NPS Tier 1 account. 
3. In this scheme, once the minor turns 18 the account will be shifted to his/her name and then they can also contribute the accumulated corpus.
4. After the candidate becomes 18, within 3 months a new KYC verification will take place.
5. A unique Pension Retirement Account Number (PRAN) will be issued by the Central Recordkeeping Agency (CRA) in the name of the candidate.
6. In this exclusive scheme, there is no limit for maximum contribution, but the minimum contribution should be INR 1000 per year.
7. After 3 years, it offers a partial amount of withdrawal and exit facilities.
8. The initial enrollment contribution should be 1000 rupees for this scheme. 
9. Once the minor turns 18 and the KYC procedure is done then the candidate can operate the account on their own. 

Documents Needed For NPS Vatsalya

To start the scheme along with the candidate, the guardians also need a few documents. Know them first,

1. PAN card of the guardians. 
2. Proof of the date of birth of the minor is mandatory. It can be a birth certificate, school leaving certificate, matriculation certificate, passport or PAN.
3. KYC of the minor’s parents, such as NREGA job card, voter ID card, Aadhar card, passport, driving license and National Population register.  
4. Signature of parents. 
5. For the NRI families, a scanned copy of the passport is needed.
6. Foreign address proof for the OCI subscribers. 
7. For NRI subscribers, a minor’s NRE or NRO bank account is also required. 

Before you apply for your kids in NPS Vatsalya, make sure you have all these genuine documents. 

Eligibility Criteria For NPS Vatsalya 

Every family who has minor children can certainly apply for NPS Vatsalya. But for that, you need to know the simple eligibility criteria first,

1. To apply for this scheme your children must be below 18 years of age. 
2. Guardians or parents of the minor can operate the account on behalf of their kid until he/she becomes 18.
3. In this scheme the minor will be the sole beneficiary and the parents and guardians will be the nominees. 
4. OCI (Overseas Citizenship of India) & NRI (Non-Resident Indian) candidates can also apply for this scheme. 
5. Account opening contribution is min Rs. 1000 and subsequent contribution is also Rs. 1000 and there is no maximum limit

How to Start Investment For NPS Vatsalya

There are a lot of ways to start investing in the NPS Vatsalya scheme. It includes major banks, pension funds, Indian posts, and many others. But the most used way to start the scheme is through the eNPS website. The steps are

1. Visit the eNPS website first.
2. Find the option called ‘Register Now’ right below there will be the ‘NPS Vatsalya (minor)’  tab.
3. Now you have to enter the PAN number, date of birth (DOB), email address, and mobile number and click on the option called ‘Begin Registration’
4. At this stage, you will receive an OTP on the given mobile number and email address.
5. After the OTP verification is done, an acknowledgement number will pop up on the screen, then just tap on ‘Continue’.
6. In this step, the parents need to fill up the details of guardians. And then again tap on ‘Confirm’.
7. As we already mentioned, to start the scheme candidates need to pay Rs. 1000. So time to pay the amount.
8. After the payment is done you need to complete the eSign authentication or dual OTP. 
9. In the ninth stage, you will receive a PRAN which confirms that your NPS Vatsalya account creation is done in the name of your minor. 

Withdrawal & Exit Rules For NPS Vatsalya 

Before 3 years of opening the account, the guardians won’t be able to withdraw any amount. But after that period only 25% of contributions can be withdrawn partially. Remember, this 25% does not include the return. To withdraw a minimum amount, parents must follow the specific rules and regulations. Such as,

1. In case of any kind of physical illness of the minor, the parents can withdraw a certain amount.
2. If the minor is suffering from more than 75% disability, their guardians can withdraw a specific amount.
3. Another important reason is the educational purpose of the minor.

Exit rule:

Once the minor becomes 18, here she can exit from the scheme. But make sure 80% of the accumulated Corpus is utilized for purchasing annuity and the remaining balance can be taken as a lump sum.

There is another catch, when the accumulated pension is lower than or equal to rupees 2,50,000 then the candidate can easily withdraw the entire amount. 

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Final Thoughts 

NPS Vatsalya is one of the greatest schemes introduced by the government of India in 2024. Being a parent we always want to secure our next generation’s life in all aspects. NPS Vatsalya not only helps us do so but also imparts a big lesson regarding savings and long-term investments. So we hope that the discussion was able to clear all your doubts and that you can start the investment without a second thought.

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Disclaimer – This article is for educational purposes only and does not intend to substitute expert guidance. Mutual fund investments are subject to market risks. Please read the scheme-related document carefully before investing.