NPS Vatsalya Scheme

About NPS Vatsalya Scheme

The Finance Minister announced “NPS Vatsalya” in the Union Budget for FY 2024-25, designed exclusively for minors under 18, to build a savings habit early, promote financial literacy, and secure children’s financial futures. The Pension Fund Regulatory and Development Authority (PFRDA) regulates it under the PFRDA Act, 2013. Parents or guardians can open an NPS Vatsalya account for their child and contribute until the child turns 18. Contributions start at ₹250 a year with no upper limit. The scheme encourages early financial planning, disciplined saving, and professional fund management dedicated to a child’s future security, backed by regulatory safeguards.

The NPS Vatsalya Scheme offers the following:

Modes of opening an NPS Vatsalya account:

• Physical mode: by visiting any registered PoP – Online facility offered by PoPs- eNPS platform of the NPS Trust – Any other electronic mode PFRDA approves

Contribution:

• Account-opening contribution: minimum ₹ 250/- and no maximum.
• Subsequent contribution: minimum ₹ 250/- p.a. and no maximum.

Gift Contribution: Besides parents/guardians, relatives and friends can also gift contributions to the NPS Vatsalya account.

Investment Parents/guardians can choose any one Pension Fund (PF) registered with PFRDA to manage the account’s investments.

Upon Attainment of the age of 18 Years:

• Once the subscriber turns 18, they continue under NPS Vatsalya for up to three more years (till 21), unless they choose to exit or shift to the NPS All Citizen Model or another applicable model.
• On turning 18, the subscriber must complete fresh KYC, provide nominee details, and furnish any other stipulated information

Exit and withdrawal from the account:

• For the subscriber’s education, treatment of specified illnesses, disability exceeding 75%, or reasons PFRDA specifies in the minor’s interest, the guardian may partially withdraw up to 25% of the subscriber’s contributions (excluding returns) after a minimum of 3 years from account opening. Up to 2 partial withdrawals are allowed before the subscriber turns 18; after turning 18 and completing the prescribed KYC, two further partial withdrawals are allowed between ages 18 and 21. This facility works on a declaration basis.
• If the minor subscriber dies, the entire accumulated corpus goes to the guardian, nominee(s), or legal heir(s), as applicable, who may also choose to transfer the proceeds into their own individual NPS account.
• If the registered guardian dies, another guardian must be registered on the minor subscriber’s behalf, submitting the KYC documents PFRDA specifies from time to time.
• If both parents die, the legally appointed guardian may continue the account, with or without further contributions; once the subscriber turns 18, they may choose to continue or exit the scheme.
• Exit is allowed only once the subscriber turns 18. On exit, up to 80% of the accumulated corpus can be withdrawn as a lump sum, with the balance used to buy an annuity; if the corpus is under ₹8 Lakh, the subscriber may withdraw the entire amount.
• If no exit or NPS-shift option is chosen by age 21, the account automatically moves into NPS under a higher-equity scheme within the Multiple Scheme Framework, under the same Pension Fund, after which standard NPS terms and conditions apply; withdrawals require completed KYC.
• Exits and withdrawals follow the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) Regulations, 2015, and its amendments.