The National Pension System Vatsalya (NPS Vatsalya) scheme is a newly launched pension initiative specifically designed for minors in India.
- The NPS Vatsalya scheme was announced in the Union Budget 2024-25.
About the NPS Vatsalya Scheme:
- It is aimed at securing the financial future of minors in India.
- Purpose: Designed exclusively for minors, the scheme aims to provide long-term financial security and encourage saving habits.
- Administered by: The Pension Fund Regulatory and Development Authority (PFRDA).
- Objectives:
- Financial Planning: Promote long-term financial planning and security.
- Savings Culture: Encourage the habit of savings from an early age.
- Dignified Life: Ensure a dignified life in old age.
Key Features:
- Eligibility: All minor citizens (below 18 years).
- Account Management: Managed by guardians until the child turns 18.
- Contribution:
- Minimum Contribution: ₹1,000 per month.
- Maximum Contribution: No upper limit.
- Active Choice Option: Guardians can allocate funds across four asset classes-
- Up to 75% in equity for growth.
- Up to 100% in corporate debt for stability.
- Up to 100% in government securities for safety.
- Up to 5% in alternate assets for diversification.
- Transition at Age 18:
- Upon reaching 18, the NPS Vatsalya account transitions to a standard NPS account.
- KYC Requirement: Fresh KYC must be completed within three months of turning 18.
- New Benefits: Features and exit norms applicable under the NPS Tier-I model come into effect.
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Frequently Asked Question:
What is the NPS Vatsalya Pension Scheme?
It is a pension scheme designed to provide financial security for minors and encourage saving habits in India.
Who manages the NPS Vatsalya scheme?
The Pension Fund Regulatory and Development Authority (PFRDA) manages the scheme.
What happens to the NPS Vatsalya account when the child turns 18?
The account transitions to a standard NPS account, requiring
fresh KYC within three months.
What is the minimum contribution to the NPS Vatsalya scheme?
The minimum monthly contribution is ₹1,000, with no upper limit on contributions.
What are the asset allocation options under NPS Vatsalya?
Guardians can invest in equity, corporate debt, government securities, and alternate assets with varying limits for growth, stability, and safety.