Fri Sep 20 06:37:59 UTC 2024: ## India Launches New Pension Scheme for Children: NPS Vatsalya

**GUWAHATI, INDIA** – Finance Minister Nirmala Sitharaman unveiled the new “NPS Vatsalya” scheme on Wednesday, aimed at helping parents save for their children’s future through a dedicated pension account.

The scheme, an extension of the existing National Pension Scheme (NPS), allows parents to create pension accounts for their children under 18 years old. The NPS Vatsalya account can be opened online, through banks, or at post offices with a minimum initial deposit of ₹1,000 and an annual contribution of at least ₹1,000.

Sitharaman highlighted the consistent competitive returns delivered by NPS, making it a secure option for long-term savings. The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA), and minor subscribers will receive a Permanent Retirement Account Number (PRAN) card.

**Key Features of NPS Vatsalya:**

* **Eligibility:** Children under 18 years old and both child and parent/guardian must be Indian citizens.
* **Investment Options:**
* **Default Choice:** Moderate Life Cycle Fund (LC-50) with 50% equity allocation.
* **Auto Choice:** Guardians can choose from three lifecycle funds: Aggressive (LC-75), Moderate (LC-50), or Conservative (LC-25).
* **Active Choice:** Guardians can allocate funds across equity, corporate debt, government securities, and alternate assets.
* **Withdrawals:** After a three-year lock-in period, up to three withdrawals of up to 25% of contributions are permitted for specific needs like education or medical expenses.
* **Account Transition:** Upon turning 18, the account automatically converts to a regular NPS account. At age 60, pension payments will begin.
* **Death Benefit:** In the event of the account holder’s death, the entire amount will be returned to the appointed guardian.

The NPS currently boasts 1.86 crore subscribers with an Asset Under Management (AUM) of ₹13 lakh crore. The launch of NPS Vatsalya signifies a significant step towards securing the financial future of India’s children.

Read More