Wed Sep 18 17:12:40 UTC 2024: ## India Unveils New Pension Scheme for Children, Boasts Strong NPS Returns

**New Delhi, India:** India’s Finance Minister Nirmala Sitharaman on Wednesday touted the National Pension System (NPS) as a compelling retirement option, especially for private sector employees. She highlighted the scheme’s impressive growth, with private sector assets seeing a 43% compound annual growth rate (CAGR) compared to 27% for government employees.

Sitharaman launched “NPS Vatsalya,” a new pension scheme designed for children under 18 years. The scheme encourages early savings for retirement, with a minimum annual contribution of ₹1,000. Upon reaching 18 years of age, beneficiaries can convert the scheme into a regular NPS account. Pension benefits will be disbursed based on the accumulated corpus after they reach 60 years old.

The minister emphasized the scheme’s ability to help individuals plan for retirement 15-20 years before entering the workforce. “NPS has generated competitive returns since its inception,” she stated. “For the non-government sector, it is absolutely stunning number,” she added, referring to the scheme’s returns on investments.

Since its opening to the private sector in 2020, the NPS has delivered a CAGR of 14% for equity investments, 9.1% for corporate debt, and 8.8% for government securities. The minister emphasized that a diversified portfolio could potentially yield a return of 10.5%-10.6% through the NPS.

Sitharaman also discussed the recently launched Unified Pension Scheme (UPS) for central government employees, which takes effect from April 1, 2025. The UPS combines the best aspects of the Old Pension Scheme (OPS) and the NPS, offering both an assured pension and a guaranteed pension of 50% of the average basic pay drawn in the last 12 months before retirement.

The UPS also includes inflation indexation based on the All India Consumer Price Index for Industrial Workers. State governments have the option to adopt the UPS, which aims to strike a balance between securing government employees’ interests while preventing future generations from bearing the burden of a heavy pension bill.

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