NPS Vatsalya: If you have invested in the NPS Vatsalya Scheme or are considering investing for your child’s bright future, this news is very important for you. The Pension Fund Regulatory and Development Authority (PFRDA) has released new guidelines for the NPS Vatsalya Scheme for children, 2025. These rules aim to make investing safe and easy for minors. These new rules replace the old guidelines issued in September 2024 and will be implemented as soon as the system is ready.
NPS Vatsalya will now be known as a ‘Special Scheme’
Following the changes made in December 2025, NPS Vatsalya has now been designated as a ‘Specific Purpose Scheme’. This gives PFRDA the authority to establish separate withdrawal and administration rules for this scheme. The situation regarding withdrawals from children’s accounts is now clear. Withdrawals can be made after three years of account opening for certain specific needs, such as:
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For studies.
For the treatment of serious diseases.
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If the disability is more than 75%.
How much money can be withdrawn?
You can only withdraw 25% of the total deposit (excluding interest). There are also limits on the number of withdrawals you can make before and after you turn 18.
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What will happen to NPS Vatsalya account after 18 years?
The new guidelines also outline options after a subscriber turns 18. Accounts can be continued in NPS Vatsalya for three more years. New KYC and nominations will be required. If desired, the account can be shifted to the NPS All Citizen model. There will be an option to withdraw up to 80% of the total corpus at once and convert the remaining amount into an annuity. If the total corpus is less than Rs 8 lakh, full withdrawal will also be permitted.
If you don’t pick an option by the time you hit 21, your account will automatically switch to the high-risk equity option under the Multiple Schemes Framework of the same pension fund.
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The investment rules are now set in stone
This scheme allows for a higher equity investment compared to many older savings plans: 50 to 75 percent in equities, 15 to 20 percent in government securities, and 10 to 30 percent in debt instruments. These guidelines are based on the NPS Master Circular from March 2025.
To make this scheme accessible to more folks in smaller towns, a new incentive has been rolled out. Anganwadi workers, Asha workers, Bank Sakhis, and other government-recognized community workers will earn a reward of up to ₹100 for every new NPS Vatsalya account they open. This incentive will be evaluated after a year. The fees and charges for this scheme are the same as those under the regular NPS All Citizens model, which includes fees for Points of Presence, Central Recordkeeping Agency, Pension Funds, NPS Trust, and Custodian.