Thu Sep 19 08:09:45 UTC 2024: ## New NPS Vatsalya Scheme: Secure your child’s future with a monthly pension of Rs. 1.5 lakh

**New Delhi:** The Finance Minister, Nirmala Sitharaman, has launched the NPS Vatsalya Scheme, a new savings and retirement plan designed to secure the future of your children. Announced in the recent budget, the scheme allows parents and guardians to invest annually in their child’s name, with benefits accruing upon their 18th birthday.

**How it works:**

* **Minimum investment:** The scheme requires a minimum annual contribution of Rs. 1000.
* **No upper limit:** There is no maximum investment limit.
* **Partial withdrawals:** The scheme allows for partial withdrawals.
* **Pension benefits:** The scheme offers pension benefits upon retirement.

**What happens at 18?**

* The child takes over the scheme and the NPS Vatsalya fund converts to an NPS Tier-1 account.
* Parents are no longer involved in the scheme.

**When the fund matures:**

* The fund matures when the child turns 18.
* The child can continue the scheme after completing KYC.
* Full withdrawal is permitted for amounts below Rs. 2.5 lakh.
* For amounts exceeding Rs. 2.5 lakh, the investor can withdraw 20% of the fund and utilize the remaining 80% for purchasing an annuity that provides a monthly pension.

**Potential returns:**

* Assuming an annual return of 10% on a Rs. 1000 investment, the fund could reach Rs. 6,05,568 by the child’s 18th birthday.
* If the child continues the scheme until they are 60, the fund could accumulate to Rs. 3.83 crore.
* By purchasing an annuity at the age of 60, the child could receive a potential annual interest of 5-6%, resulting in a monthly pension of approximately Rs. 1.5 lakh.

The NPS Vatsalya Scheme provides a secure way for parents to invest in their children’s future, ensuring a comfortable retirement and a steady income stream.

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