HomeNationalExplained: What is NPS Vatsalya pension scheme for your children

Explained: What is NPS Vatsalya pension scheme for your children

New Delhi, Sep 20 (IANS) In a significant move to secure the financial future of young children in India, the government has launched the NPS Vatsalya pension scheme, which offers flexible contributions and investment options for parents or guardians.

Announced in the Union Budget 2024-25, the National Pension System Vatsalya (NPS Vatsalya) scheme is designed exclusively for minors, marking a significant advancement in financial planning.

The scheme not only will secure the future of its young citizens of the country, but also foster a culture of savings from an early age.

What is the NPS Vatsalya scheme?

The NPS Vatsalya scheme is a saving-cum-pension scheme, which will be regulated and administered by the Pension Fund Regulatory Authority of India (PFRDA).

Under the NPS Vatsalya scheme, parents can invest a minimum of Rs 1,000 per month with no upper limit.

The scheme will be operated by parents until the child reaches 18. At the age of 18, the account will transition into the child’s name.

It can then be seamlessly converted into a regular NPS account or another non-NPS scheme.

The NPS Vatsalya scheme also allows for flexible contributions to the account by giving guardians the choice to select from a variety of pension funds for managing investments.

The Moderate Life Cycle Fund (LC-50), is the default choice, which allocates 50 per cent of the investment to equity. Under the auto choice option, guardians can select from three lifecycle funds — aggressive LC-75, moderate LC-50, and conservative LC-25 — based on their risk tolerance.

Under the Active Choice option, guardians have full control over how they allocate funds across four asset classes — 75 per cent in equity for higher growth potential, up to 100 per cent in corporate debt for stability, up to 100 per cent in government securities for safety, and up to 5 per cent in alternate assets for diversification.

These options allow guardians to tailor their investment strategies based on their financial goals and risk preferences.

How to be a part?

The scheme enables all minor citizens up to the age of 18 to open an account.

While the account is opened in the name of the minor, it is managed by their guardian until the child reaches adulthood.

The account can be created through registered Points of Presence (PoPs) which include major banks, India Post, and pension funds. Accounts can also be set up online via the NPS Trust’s eNPS platform.

What are the documents required

To open an NPS Vatsalya account, necessary documents include proof of date of birth — birth certificate, school leaving certificate, matriculation certificate, PAN, or passport; guardian’s proof of identity and address, which can include Aadhaar, driving license, passport or Voter ID card.

A Permanent Account Number (PAN) of the guardian or Form 60 declaration, as per Rule 114B is also needed.

In case the guardian is an NRI (Non-Resident Indian) or OCI (Overseas Citizen of India), an NRE/NRO bank account (solo or joint) of the minor will be required.

Transition upon attaining 18 years

When the minor reaches the age of 18, the NPS Vatsalya account will seamlessly transition to the NPS Tier-I (all-citizen) model. 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.

This innovative scheme is expected to enhance financial planning and ensure a dignified future for all citizens, setting a precedent for comprehensive financial well-being across generations.

–IANS

rvt/

Go to Source

Disclaimer

The information contained in this website is for general information purposes only. The information is provided by TodayIndia.news and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.

In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.

Through this website you are able to link to other websites which are not under the control of TodayIndia.news We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.

Every effort is made to keep the website up and running smoothly. However, TodayIndia.news takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.

For any legal details or query please visit original source link given with news or click on Go to Source.

Our translation service aims to offer the most accurate translation possible and we rarely experience any issues with news post. However, as the translation is carried out by third part tool there is a possibility for error to cause the occasional inaccuracy. We therefore require you to accept this disclaimer before confirming any translation news with us.

If you are not willing to accept this disclaimer then we recommend reading news post in its original language.

RELATED ARTICLES
- Advertisment -

Most Popular