New Delhi: Union finance minister Nirmala Sitharaman on Wednesday launched the NPS Vatsalya scheme, which will allow parents to save for their children's future by investing in a pension account. Parents can subscribe to NPS Vatsalya online or by visiting a bank or post office. The minimum contribution to open a Vatsalya account is Rs 1,000, while subscribers will have to contribute Rs 1,000 annually thereafter.
The NPS Vatsalya scheme is an extension of the already existing NPS to children. In the last 10 years, NPS has 1.86 crore subscribers with an Asset Under Management (AUM) of Rs 13 lakh crore. The guidelines for withdrawal from NPS accounts are being finalised. Launching the scheme, Ms Sitharaman said NPS has generated very competitive returns and offers the option to people to save while ensuring future income.
Children below the age of 18 years can open an NPS Vatsalya account, which will automatically get converted to a regular NPS account on completion of 18 years of age. Pension will come from the account only upon attainment of 60 years of age. “The NPS scheme has generated 14 per cent, 9.1 per cent, and 8.8 per cent returns for investments in equity, corporate debt and G-Secs, respectively,” Ms Sitharaman said.
NPS Vatsalya was announced in the FY25 Budget presented in July. Many lenders, including ICICI Bank and Axis Bank, have joined hands with the PFRDA to launch the National Pension Scheme (NPS) - Vatsalya. ICICI Bank also inaugurated the scheme's commencement in Mumbai at its service centre by registering a few children's accounts under NPS Vatsalya.
