Who can open NPS vatsalya?

Parents or guardians, whether Indian citizens, NRIs, or OCIs, can open an NPS Vatsalya account for their minor children.

What are the key features of NPS Vatsalya?

It offers the flexibility of contributions and choice of pension funds, with an emphasis on long-term wealth creation through market-based investments.

NPS Vatsalya Scheme

NPS Vatsalya Scheme is a government-backed scheme announced in the newly presented Union Budget on 23 July 2024. The scheme will help parents to plan an income for the retirement of their children. NPS Vatsalya scheme aims to give a peace of mind to the parents by securing the financial future of their child.

Investing in your child's future:A wise decision & a loving choice

Benefits of Investing In Child Plan

Waiver of Premium Benefit

Future Premiums are paid by the insurer upon death of policyholder

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Your premiums help your child achieve their dreams through lump sum or regular payouts

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Tax Benefits^

You get tax benefits under Section 80(C) and no tax on returns under Section 10 (10D)

Investment Flexibility

It offers the flexibility to invest at regular intervals or as a one-time contribution

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Disclaimer: #The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CAGR 8%; ₹50,45,591 @ CAGR 4%. *Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.

What is the NPS Vatsalya Scheme?

NPS Vatsalya is a scheme for minor children where parents or guardians can contribute to a National Pension Scheme (NPS) account in the name of the child until they reach the maturity age of 18 years.

The NPS Vatsalya scheme was introduced in Budget 2024 by the Government of India. It allows the NPS Vatsalya Account for children to convert into a standard NPS account, once they reach adulthood. The child can manage their NPS account independently after reaching the maturity age of 18. This scheme helps parents to start saving early for the retirement of their children.

What is NPS?

NPS, or the National Pension System is also widely known as the National Pension Scheme. It is a government-sponsored tax-saving investment scheme that allows you to contribute regularly during your working years to get a pension fund for retirement.

The accumulated savings are invested in various market-linked financial instruments to generate returns over time.

Upon retirement, you can withdraw a portion of the pension fund in lump sum and the remaining amount to purchase an annuity plan for securing a regular income post-retirement.

NOTE: Union Budget 2024 raised the employer’s NPS contribution limit from 10% to 14% of their salary.

Features of NPS Vatsalya Scheme

The government is yet to release the full details of the NPS Vatsalya Scheme. However, a few of the known key features of this scheme are as follows:

NPS Vatsalya scheme aids in securing children's financial future.
Funds under NPS Vatsalya accumulate until the child reaches 18 years.
NPS Vatsalya offers a structured financial planning tool for children's future, mirroring the NPS model for retirement planning.
Contributions to NPS are invested in market-linked instruments like funds and bonds, offering potential for higher returns than traditional fixed-income options.

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Eligibility Criteria for NPS Vatsalya Scheme

You must fulfil the following eligibility conditions before applying for this scheme:

Both Indian Citizen and Non-Resident Indian (NRI) Parents and Guardians
OCIs are also eligible

Benefits of NPS Vatsalya Scheme

The following are the key benefits of NPS Vatsalya Scheme:

Promotes Saving Habits: NPS Vatsalya encourages the habit of saving from an early age.
Retirement Planning Benefits: NPS Vatsalya account helps you to build a substantial retirement corpus with early contributions in the NPS account.
Financial Security and Stability: It ensures long-term financial stability by allowing the conversion of the NPS Vatsalya Account to a standard NPS account on attaining maturity and continuing as a reliable retirement fund.
Financial Education and Responsibility: NPS Vatsalya helps teach children how to manage their finances responsibly from a young age, promoting savings habits as children mature.
Systematic Approach to Financial Planning: NPS Vatsalya provides you with a structured method to secure your child’s financial future and build a huge retirement corpus.

FAQs

What is the NPS vatsalya scheme?

NPS Vatsalya Scheme is a special initiative under the National Pension System designed for parents to help save for the future of their minor children.
Who can open NPS vatsalya?

Parents or guardians, whether Indian citizens, NRIs, or OCIs, can open an NPS Vatsalya account for their minor children.
What are the key features of NPS Vatsalya?

It offers the flexibility of contributions and choice of pension funds, with an emphasis on long-term wealth creation through market-based investments.

†Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
#The investment risk in the portfolio is borne by the policyholder. Life insurance is available in this product. The maturity amount of Rs 1 Cr. is for a 30 year old healthy individual investing Rs 10,000/- per month for 30 years, with assumed rates of returns @ 8% p.a. that is not guaranteed and is not the upper or lower limits as the value of your policy depends on a number of factors including future investment performance. In Unit Linked Insurance Plans, the investment risk in the investment portfolio is borne by the policyholder and the returns are not guaranteed. Maturity Value: ₹1,05,02,174 @ CARG 8%; ₹50,45,591 @ CAGR 4%
+Returns Since Inception of LIC Growth Fund
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
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^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.