Parents often look for various savings plans to secure their children’s future. Now, the central government has launched a unique scheme, the NPS Vatsalya Scheme, which not only opens the door for children to save for retirement but also helps meet essential needs like education and health. This innovative scheme was announced by the Finance Minister in the 2024-25 Budget. The most important feature of this scheme is that parents or guardians can open an account in their child’s name and deposit a minimum of ₹1,000 annually. There is no upper limit on the maximum amount.
Withdrawal facility even before the age of 18
This scheme ensures financial security in emergencies. If a child needs money for education, treatment of a serious illness, or a disability of more than 75 percent, parents can withdraw up to 25 percent of the account balance. This facility can be availed of a maximum of three times after the account has been in operation for three years.
Automatic NPS Conversion Upon Turning 18
As soon as the child turns 18, the account will automatically convert to a regular NPS Tier-I account. This means that this account will continue to serve as their retirement savings account. There will be no hassles or new procedures required. Upon turning 18, the child will convert to NPS Tier-I (All Citizens), after which only a new KYC (Know Your Customer) will be required. After this, the child can decide for themselves whether to remain in the scheme or exit.
Flexibility in Investment Options
The NPS Vatsalya plan offers several investment options:
Default Option: This consists of a moderate lifecycle fund with 50 percent equity investment.
Auto Option: Parents can choose from Aggressive (75 percent equity), Moderate (50 percent equity), or Conservative (25 percent equity).
Active Option: Parents can choose between equity, government securities, corporate debt, or alternative assets.
Account Opening Process
Visit the NPS Trust website at npstrust.org.in to apply online.
Click on “Open NPS Vatsalya.”
Enter the guardian and child’s details.
Perform OTP verification.
Complete KYC and upload the child’s DOB proof.
Select an investment option and make an initial contribution of at least ₹1,000.
A PRAN number will be generated, and you can now save for your child at your convenience.
Required Documents
Guardian’s Aadhaar, PAN, or Driving License.
Child’s Birth Certificate or School Certificate.
Guardian’s Signature.
Passport, foreign address proof, and bank statements for NRIs or OCIs.
Special Protection and Financial Education
Account management is also easy in the event of the guardian’s death. A new guardian can be registered with the KYC documents upon the child’s guardian’s death. If both parents die, a court-appointed guardian can continue to manage the account for the children.
The NPS Vatsalya plan provides children with an invaluable opportunity to learn the nuances of financial planning and savings from an early age. This plan is a powerful platform to balance long-term savings and immediate needs, providing real security for your child’s future.