NPS Vatsalya: A New Pension Scheme for Minors Launched by Union Finance Minister Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman has introduced NPS Vatsalya, a groundbreaking pension account designed specifically for minors. This initiative, part of the National Pension System, is overseen by the Pension Fund Regulatory and Development Authority (PFRDA). It aims to secure the financial future of children from an early age. The launch also included the unveiling of an online platform for subscribing to NPS Vatsalya and the issuance of Permanent Retirement Account Number (PRAN) cards to new minor subscribers.

NPS Vatsalya is a pension scheme that allows parents to invest in their children's future. With flexible contribution options and various investment choices, parents can contribute a minimum of Rs. 1,000 annually in the child's name. This initiative ensures long-term wealth accumulation through the power of compounding, making it accessible to families from diverse economic backgrounds.

Kurian Jose, CEO of Tata Pension Management, explains, "NPS Vatsalya is dedicated to securing the financial future of children. Parents or guardians can build a retirement corpus for their children from infancy until they reach 18 years. The account, opened in the child's name, is operated by a guardian, with the child as the sole beneficiary. At 18, the account transitions seamlessly to NPS Tier – I (All Citizen). This initiative encourages early investment and provides a structured savings plan, fostering financial responsibility from an early age."

According to the Central Bank of India, the scheme allows for withdrawals of up to 25% of contributions after a three-year lock-in period, for purposes such as education, specified illnesses, and disability, with a maximum of three withdrawals allowed. Upon reaching 18 years of age, the account transitions to NPS Tier – I.

For accounts with a corpus exceeding Rs. 2.5 lakh, 80% of the funds must be used to purchase an annuity, while the remaining 20% can be withdrawn as a lump sum. If the corpus is Rs. 2.5 lakh or less, the entire amount can be withdrawn as a lump sum. In the event of the minor's death, the entire corpus is returned to the guardian.

According to the Central Bank of India, the scheme offers the following features:

• Scheme Type: A saving-cum-pension scheme regulated by PFRDA.
• Eligibility: Open to all minor citizens up to 18 years old.
• Account Operations: The account is opened in the minor's name and operated by a guardian. The minor is the sole beneficiary.

The NPS Vatsalya account can be opened through Points of Presence (POPs), including major banks, India Post, Pension Funds, and the online platform e-NPS. For example, ICICI Bank has announced that all its business centers across the country are equipped to open NPS Vatsalya accounts. Parents or guardians can contribute on behalf of their children, ensuring long-term wealth creation. The account will transition to a standard NPS account when the minor reaches adulthood, following the submission of necessary KYC documents.

• KYC documents of the guardian, including proof of identity and address.
• Proof of date of birth of the minor.
• NRE/NRO bank account details of the minor if the guardian is an NRI.

Guardians can select from various pension funds registered with PFRDA. The default choice is the Moderate Life Cycle Fund (LC-50), which allocates 50% to equity. Other options include:

• Auto Choice: Guardians can choose from Lifecycle Funds – Aggressive (LC-75 with 75% equity), Moderate (LC-50 with 50% equity), or Conservative (LC-25 with 25% equity).
• Active Choice: Guardians can actively allocate funds across Equity (up to 75%), Corporate Debt (up to 100%), Government Securities (up to 100%), and Alternate Assets (up to 5%).

For more information or to open an NPS Vatsalya account, visit your nearest ICICI Bank business center or access the online platform e-NPS through [this link](https://app.camsnps.com/CRA/auth/enps/register?source=eNPS - CAMS CRA). Secure your child's financial future today with NPS Vatsalya.

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