NPS Vatsalya Yojana: Do you want your child’s future to be completely financially secure? Then work on this has to start from today itself. The Government of India has launched a great scheme to inculcate the habit of savings and pension for children: NPS Vatsalya Yojana. Launched in July 2024, this scheme is extremely beneficial in many ways and can provide a strong financial foundation for your child’s future. Let us know about this unique scheme in detail.

What is NPS Vatsalya Yojana

NPS Vatsalya is a special pension scheme specially designed for minor children. This scheme was launched in July 2024. Under this scheme, parents or legal guardians can open a PRAN (Permanent Retirement Account Number) in the name of their child. The amount deposited in this account is invested in various assets like Government Bonds, Equity, etc. Over a long period, the magic of compounding makes this fund grow much larger, creating a strong financial backup for the child’s future. The main objective of this scheme is to inculcate the habit of saving in children and ensure long-term financial security for them. As the investment grows, a solid financial foundation is laid for the child’s future.

How much and how to invest

Investing in NPS Vatsalya Yojana is extremely easy and flexible:

You can invest a minimum of ₹1,000 per year.

There is no maximum limit on investment. This means you can invest any amount according to your financial capacity.

This scheme is available for children aged 0 to 18 years.

The account can be opened by parents or legal guardians.

Families from all sections can invest in this scheme. Those who have more resources can create a bigger fund for the child by investing more.

Priceless benefits of NPS Vatsalya

This scheme provides many great benefits for your child’s future. This scheme can give an average return of 9.15% to 10% annually. This return depends on long-term investment and market performance, which makes it more attractive than traditional savings schemes like bank FDs.

Understand with an example:-

If a parent deposits ₹ 15,000 every month for their 3-year-old child and continues this process for 15 years (till the child turns 18), then by the time the child turns 18, about ₹ 60.24 lakh will be deposited in their account (assuming a 10% average return). This amount will form a strong foundation for the child’s higher education or other major financial goals.

Withdrawal and tax exemption facility

NPS Vatsalya Yojana provides financial security to your child not only for future goals but also in difficult times. If, for any reason, the parents die or the family faces a financial crisis, the amount deposited in the Vatsalya scheme provides financial security to the child’s future. This scheme also has the facility of partial withdrawal with certain conditions.

Withdrawal of up to 25% is possible for needs like education or emergency. Tax exemption is also available on the amount invested in this scheme under section 80C and under section 10 (10D). This tax benefit encourages you to save more.

Useful in every need, be it education, retirement, or medical

This scheme is not only helpful for the child’s higher education, but it can become a reliable support in the future for their retirement, health expenses, or any unexpected situation. This is an investment that can secure the entire lifetime of the child.