NPS Vatsalya Scheme is a Contributory saving-cum-pension scheme, regulated and administered by the Pension Fund Regulatory Authority of India (PFRDA), designed for minor Indian citizens till the age of 18 years. It aims to financially secure children’s futures by allowing Indian parents to invest in the government’s pension scheme on behalf of their children. Basically it’s an extension to the NPS(National Pension Scheme).
We will go through all the details of NPS Vatsalya Scheme Eligibility, Investment Amount, Withdrawals, How to Apply Online, and finally should you invest in it. Let’s get started.
NPS Vatsalya Scheme is a unique scheme that allows you to plan for the retirement of your children. This investment matures once your child turns 60, and the account becomes a regular NPS Account at the Age of 18.
- Minimum Investment of ₹1,000 per year and no maximum limit on Investment.
- Account opened in the name of minor and is operated by Guardian.
- Contributory Pension Scheme regulated and administered by the PFRDA.
- The Central Recordkeeping Agency (CRA) will issue a unique Pension Retirement Account Number (PRAN) in the name of the minor.
- Shifts to NPS Tier-1 on attaining the age of 18.
- Fresh KYC of the Minor within 3 months from the date of attaining 18 years.
Who is Eligible for NPS Vatsalya Scheme?
- All minor citizens (age till 18 years) are eligible.
- Non-resident Indian (NRI) and Overseas Citizenship of India (OCI) individuals below 18 years
- Parents or guardians will be nominees under the scheme, and the child will be the sole beneficiary.
Documents Required for NPS Vatsalya Scheme
- Date of Birth Proof for the Minor: Birth Certificate, School Leaving Certificate, Matriculation Certificate, PAN or Passport.
- KYC of the Guardian: The Guardian must submit identity and address proof which may include an Aadhaar card, Driving License, Passport, Voter ID, NREGA Job Card, or National Population Register documents.
- Permanent Account Number(PAN) of the Guardian
- NRE/NRO Bank Account (Solo or Joint) of the minor, in case the guardian is an NRI(Non-Resident Indian) or OCI(Overseas Citizen of India).
Contribution & investment Choices in NPS Vatsalya Scheme
NPS Vatsalya Scheme allows flexible contributions to the account
- Account opening Contribution: A minimum contribution of ₹1,000 is required to open the account, with no maximum contribution limit.
- Subsequent Contributions: A minimum contribution of ₹1,000 per year is required, and there is no limit on the amount that can be contributed per annum.
There are 3 key investment choices out of which Investor choose any:
- Default Choice: The Moderate Life Cycle Fund(LC-50), which allocates 50% of the Investment to the Equity(Stocks, Share Market).
- Auto Choice: Under the Auto Choice option, guardians can select from three Lifecycle Funds based on their risk tolerance. The Aggressive LC-75 allocates up to 75% of the investment in equity, suitable for those with a higher risk appetite. The Moderate LC50 allocates 50% in equity, offering a balanced approach. For those seeking a more conservative strategy, the Conservative LC-25 allocates 25% in equity, minimizing risk while still providing growth potential.
- Active Choice: Under the Active Choice option, guardians have full control over how they allocate funds across four asset classes. They can invest up to 75% in equity for higher growth potential, up to 100% in corporate debt for stability, up to 100% in government securities for safety, and up to 5% in alternate assets for diversification. This option allows guardians to tailor their investment strategy based on their financial goals and risk preferences.
The contributions made by the subscriber are invested according to the choices (Pension Fund and Asset
allocation) exercised and recorded with CRA, in line with the investment guidelines prescribed by PFRDA for each asset class:
- Asset Class E – Equity shares of Top 200 companies under NSE/BSE in terms of market capitalization.
- Asset Class C – Corporate Bonds/Debentures that are listed and rated not below A.
- Asset Class G – Government securities and State Development Loans.
- Asset Class A – Alternate Assets. For detailed investment guidelines, refer to the Circulars Section
of the PFRDA website.
How to apply for NPS Vatsalya Scheme online?
The account can be created through registered Points of Presence (PoPs) with the Pension Fund Regulatory and Development Authority (PFRDA). These PoPs include major banks, India Post, and pension funds, with both online and physical modes available for account setup.
The online platform (eNPS) is the quickest way to open an NPS Vatsalya account. This system allows you to open an NPS Vatsalya account and make subsequent contributions. You Can Create an account using any of the CRAs(Central Recordkeeping Agency) given below:
You can apply via all the above 3 CRAs. Click on it to continue with the registration process and fill in all the details in the registration form online to open the account. Let me know in comments below if you face any difficulty of have any questions.
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Transition of NPS Vatsalya on completion of 18 years
When the minor reaches the age of 18, the NPS Vatsalya account undergoes a seamless transition to the NPS Tier-I (All Citizen) model. As part of this process, a fresh KYC must be completed within three months from the date of turning 18. Once the account transitions, the features, benefits, and exit norms applicable under the NPS Tier-I All Citizen Model will come into effect, providing continued financial security and investment opportunities for the individual.
Withdrawal from NPS Vatsalya Scheme
Partial Withdrawal from NPS Vatsalya before 18 years of age
Partial withdrawals from the NPS Vatsalya Account before 18 years of age are allowed but in specific situations and with a few conditions :
- The Reasons/Conditions for Partial withdrawal include Education of the minor Subscriber, Treatment of specified illness of the minor subscriber, and Disability of more than 75% of the minor subscriber.
- A maximum amount of up to 25% of contributions (excluding returns) can be partially withdrawn.
- This facility is available on a declaration basis after a minimum of 3 years from the date of account
opening. - The Partial withdrawal can be made a maximum of three times till the subscriber attains 18 years of age.
Exit Options under NPS Vatsalya Scheme
- The Subscriber can exit on attaining the age of 18 years.
- On such exit, at least eighty percent of the accumulated corpus available in the account must be
utilized for the purchase of an annuity and the remaining balance will be paid in a lump sum. - In case, the accumulated pension wealth available in the account is equal to or less than two lakh
fifty thousand(₹2,50000), or purchase of annuity is not available from empaneled Annuity Service Providers (‘ASPs’), the subscriber will have the option to withdraw the entire accumulated pension wealth.
NPS Vatsalya Scheme Death before 18 years
- In the event of the minor subscriber’s death, the entire accumulated corpus is to be paid to the guardian.
- If the guardian registered under the account dies during the account’s subsistence, another guardian must be registered on behalf of the minor subscriber by submitting the KYC documents as specified by the PFRDA from time to time.
- In case of the death of both parents, the legally appointed guardian can continue the account with or without making contributions to the account, and upon attainment of 18 years of age, the subscriber can exit from the scheme.
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Frequently Asked Questions about NPS Vatsalya Scheme
What are the minimum and maximum contributions under the NPS Vatsalya account?
- The minimum contribution is ₹1000 per annum, with no upper limit on the maximum contribution.
- The initial contribution required for enrollment under the scheme is ₹1000.
How do I know about the performance of my NPS investments?
The performance of your NPS investments is available in the Statement of Transactions, which can be accessed online through the subscriber web login or mobile app. Periodic statements are sent by the CRA to the registered email ID of the subscriber, and a physical statement for the financial year is sent to the correspondence address of the subscriber.
What happens if I don’t make the minimum contribution to NPS Vatsalya? Will my account be closed?
If the minimum contribution is not received, the account is categorized as ‘frozen’ and will be activated upon contributing to the account. The NPS account will be closed only when a subscriber submits a request (physical or online) for exit from NPS to a service provider (PoP).
How do I access my NPS Vatsalya account?
Subscribers can access their NPS Vatsalya Account through:
- Physical mode: By visiting their service provider (PoP).
- Online mode: Using the login credentials provided by CRA in the Account Opening Kit.
Whom should I approach if I have a complaint /grievance regarding NPS Vatsalya Scheme?
- For resolving subscriber grievances, the Authority has notified the PFRDA (Redressal of Subscriber
Grievance) Regulations, 2015, and an online platform ‘Central Grievance Management System (CGMS)’
has been hosted for subscribers to lodge grievances online by logging into his/her NPS account. - A complaint/grievance has to be resolved by the intermediary concerned as early as possible within a
maximum period of 30 days from the receipt of the complaint.
