What is NPS Vatsalya: Finance Minister Nirmala Sitharaman mentioned the ‘NPS Vatsalya’ scheme in the budget presented on February 1, 2024. Subsequently, this scheme was launched with children’s future in mind. Parents are given the ability to save for their children’s future by investing in a pension account. Parents can become part of the NPS Vatsalya scheme online or by visiting a bank or post office. The minimum contribution required is ₹1,000.
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NPS Vatsalya is an extension of the existing NPS offered by the Public Sector Undertaking (PFRDA). Accounts can be opened for children under the age of 18. The investment can be withdrawn upon the child’s attainment of 18 years of age. Additionally, you can convert this into a regular NPS account. Pension for accounts opened under NPS Vatsalya will be available only upon reaching the age of 60.
Several banks, including ICICI Bank and Axis Bank, have partnered with the Public Sector Undertaking (PFRDA) for “NPS Vatsalya.” The NPS Vatsalya account, like a regular NPS account, comes with auto-choice and active-choice options. By default, NPS account holders will receive a moderate lifecycle fund with a 50% equity ratio. Under auto-choice, they will receive a 75%/50%/25% equity option.
If you have invested in the NPS Vatsalya scheme in your child’s name, you can exit the scheme when they turn 18. If the child’s account balance is less than ₹2.5 lakh, you can withdraw the entire amount in one go. However, if the balance exceeds ₹2.5 lakh, you can withdraw 20% of the amount in one go. You can use the remaining balance to purchase an annuity for regular income.
To open this account in the child’s name, a birth certificate, the parent’s Aadhaar card, DL, passport, voter ID card, MNREGA job card, or National Population Register card will be required for KYC. The parent’s PAN card is also required. The PRAN will be issued in the child’s name.
If you invest ₹10,000 every month for 18 years and earn 10% interest annually, you will invest a total of ₹21,60,000. Based on this return, you can expect to receive approximately ₹57.64 lakh.
If you invest Rs 10,000 every month for 18 years and get 12% interest every year, then after 18 years you will have around Rs 71 lakh 17 thousand 286.
Additionally, if you invest ₹10,000 per month for 18 years and earn 12.86% interest annually. This is the historical return from selecting 75% equity in NPS, you will have approximately ₹78,01,061 after 18 years.
(InformalNewz has provided only an estimate. It is important to consult an expert before investing.)
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