The NPS Vatsalya scheme was launched on September 18, 2024. Under this scheme, parents and legal guardians can start saving for their children for the long term from an early age.
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Who can invest: This scheme is open to all Indian citizens under the age of 18, including non-residents and other Indian citizens. The minor is the sole beneficiary of the account, which is opened in the minor’s name and operated by his or her parent or guardian.
Contribution rules: The minimum initial and annual contribution is ₹250, with no maximum investment limit. Relatives or friends can also contribute as gifts.
Partial Withdrawal Rules: Withdrawals are permitted after three years from the date of account opening. Up to 25% of the customer’s deposit can be withdrawn for specific purposes such as education, medical treatment, and notified disabilities. These withdrawals can be made a maximum of two times before the age of 18 and a maximum of two times between the ages of 18 and 21.
What happens upon maturity: New KYC becomes mandatory when customers turn 18. Until they reach 21, customers are offered several options: they can continue under the NPS Vatsalya scheme, migrate to NPS Tier I under the All-Citizen model or any other applicable model, or opt out of the scheme.
What has changed in this plan now? The exit criteria have been changed. You can now withdraw up to 80% of the amount in a lump sum, while a minimum of 20% must be used for annuity. If the total amount is Rs 8 lakh or less, the entire amount can be withdrawn. Previously, withdrawals were only allowed up to 60%.
Rs 11 crore on retirement: If someone invests Rs 1000 every month under NPS Vatsalya Yojana and gets an annual return of 9 per cent, then in 60 years he will have Rs 11.57 crore.
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