Union Finance Minister Nirmala Sitharaman unveiled NPS Vatsalya in line with the July Union Budget 2024 announcement.
NPS Vatsalya is a pension scheme designed for minors. This initiative was rolled out across 75 locations nationwide with over 250 PRANs (permanent retirement account numbers) being allocated to young subscribers.
Under NPS Vatsalya scheme, parents can invest a minimum of ₹1,000 per month with no upper limit, thereby fostering a habit of disciplined savings for their children, the Ministry of Finance said in a statement.
The scheme is designed to be operated by parents until the child turns 18, at which point the account transitions to the child’s name. Upon reaching the account holder adulthood, the account can be seamlessly converted into a regular NPS account or another non-NPS scheme, it added.
With the promise of substantial wealth accumulation through the power of compounding, the NPS Vatsalya envisions providing a dignified and secure financial future for its subscribers, aligning with the government’s commitment to comprehensive financial well-being.
Under the NPS Vatsalya scheme, all minor citizens up to the age of 18 are eligible to open an account. The account is opened in the name of the minor and managed by his/her guardian until the child reaches adulthood, ensuring that the minor remains the sole beneficiary throughout the process.
According to Nirmala Sitharaman, NPS Vatsalya will encourage young subscribers to develop savings habit, and significant wealth can be built up through the effects of compounding. She emphasised that the scheme would provide a respectable life for individuals in their later years.
As per the NPS Trust website, the documents required to register under the scheme are: Date of Birth proof of the Minor (Birth certificate, School leaving certificate/ Matriculation Certificate, PAN and Passport); KYC of the Guardian shall be carried out by submitting; Proof of Identity and Address (Aadhaar, Driving License, Passport, Voter ID card, NREGA Job Card and National Population Register); NRE / NRO Bank Account (solo or joint) of the minor in case guardian is NRI.
Following the launch, numerous banks introduced the pension plan for minors, including ICICI Bank, Axis Bank, Canara Bank, Punjab National Bank, Central Bank of India, and Bank of Maharashtra.