Finance Minister Nirmala Sitharaman introduced the NPS Vatsalya scheme on Tuesday, designed to help parents save for their children’s future through a pension account. The new scheme enables parents to open an NPS Vatsalya account with a minimum initial contribution of ₹1,000, with an annual contribution requirement of ₹1,000 thereafter.
Subscribers can enroll in the scheme either online or by visiting participating banks and post offices. The scheme is an extension of the existing National Pension System (NPS) and allows children below 18 years of age to open an account. Once the child turns 18, the NPS Vatsalya account will automatically convert to a regular NPS account, with pensions accessible only upon reaching 60 years of age.
Sitharaman highlighted that the NPS has provided competitive returns in recent years, generating 14% returns on equity investments, 9.1% on corporate debt, and 8.8% on government securities. The NPS Vatsalya scheme builds on the success of NPS, which has accumulated ₹13 lakh crore in assets with 1.86 crore subscribers over the past decade.
The scheme was first announced in the FY25 Budget presented in July. Prominent banks, including ICICI Bank and Axis Bank, have partnered with the Pension Fund Regulatory and Development Authority (PFRDA) to facilitate the scheme’s launch. ICICI Bank has already begun registering children’s accounts at its Mumbai service center.
Financial Services Secretary Nagaraju Maddirala assured that the government is open to feedback and will make improvements to the scheme based on subscriber suggestions. Maddirala noted that the government is committed to refining the NPS Vatsalya scheme to address any concerns and enhance its effectiveness.
Sources By Agencies