Thu Sep 19 07:09:32 UTC 2024: ## New NPS Vatsalya Yojana Aims to Secure Children’s Financial Future

**New Delhi:** The Union Finance Minister Nirmala Sitharaman launched the NPS Vatsalya Yojana, a new initiative under the National Pension System (NPS), on Wednesday, September 18. This scheme, announced in the July Budget 2024, aims to help parents secure a comfortable financial future for their children.

NPS Vatsalya allows parents or guardians to build a retirement corpus for their children from their childhood up to the age of 18. The account is opened in the minor’s name and operated by the guardian, with the minor being the sole beneficiary.

Any minor is eligible to participate in the scheme, with a minimum initial contribution of ₹1,000 and subsequent annual contributions of ₹1,000. Parents can open the account online or in person at registered points of presence such as banks, post offices, and pension funds, or through the NPS Trust’s eNPS platform. Several banks, including ICICI Bank and Axis Bank, are partnering with the Pension Fund Regulatory and Development Authority (PFRDA) to facilitate the initiative.

Upon turning 18, the Vatsalya account automatically converts to a regular NPS Tier I account, providing access to all investment features, including Auto Choice and Active Choice. This seamless transition ensures a smooth transition to the NPS Tier I (All Citizen) plan.

By encouraging early investment and structured savings, NPS Vatsalya seeks to create a solid financial foundation for young individuals. Kurian Jose, CEO of Tata Pension Management, emphasized the scheme’s role in fostering financial responsibility from an early age through disciplined saving and the benefits of compounding.

Minister Sitharaman highlighted the impressive returns generated by NPS, including 14% in equity, 9.1% in corporate debt, and 8.8% in government securities. Illustrative projections show that an annual contribution of ₹10,000 for 18 years, at an expected rate of return of 10%, could grow into a corpus of approximately ₹5 lakh. Continuing the investment until the age of 60 could potentially result in a corpus of ₹2.75 crore. Higher returns, based on different investment allocations, could lead to even larger corpus amounts, reaching up to ₹11.05 crore.

It is important to note that these figures are illustrative and based on historical data, and actual returns may vary. Investors are advised to consult with certified experts before making any investment decisions.

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