NPS Vatsalya Scheme: Are you concerned about your child’s future? If you have a limited income but still want to build a large savings fund for your child, this scheme can help.
By investing just ₹834 per month in this government scheme, you could save up to ₹11 crore for your child.
Launched by the Central Government in September 2024, the NPS Vatsalya Scheme turns small monthly contributions into a large fund over time.
Its main goal is to help low- and middle-income families save for their children’s future, especially for retirement.
How Does the Scheme Work?
Parents can invest ₹834 per month or ₹10,000 per year in their child’s name, provided the child is under 18 years of age.
If the child continues investing until the age of 60, the fund can grow to around ₹11 crore.
This is based on an average annual return of 12.86%, which can be achieved through the scheme’s Aggressive Investment Option.
Who Can Avail the Scheme?
The child must be below 18 years of age.
PAN card and Aadhaar card are required.
When the child turns 18, the account will convert into a regular NPS Tier-1 account.
How Much Can You Invest?
The minimum annual investment is ₹1,000.
There is no maximum limit; you can increase your investment as your income grows.
Investment Options Based on Risk
Aggressive Mode: 75% investment in the stock market (high risk, high return)
Moderate Mode: 50% in the stock market (moderate risk, balanced return)
Conservative Mode: 25% in the stock market (low risk, stable return)
Active Choice: You decide how much to invest in equity and how much in debt.
Small Investment, Big Returns
If a parent starts investing ₹10,000 annually at birth, the expected fund at retirement based on different return rates can be:
12.86% return – ₹11 crore
11.59% return – ₹5.97 crore
10% return – ₹2.75 crore
These are estimates. Actual returns may vary depending on market conditions and investment strategy.
Withdrawal Facility in Emergencies
After 3 years, you can withdraw up to 25% of the total investment for essential needs like education, medical treatment, or disability. This can be done up to 3 times.
What Happens When the Child Turns 18?
If the fund exceeds ₹2.5 lakh: 80% of the amount will go into a pension plan (annuity), and 20% can be withdrawn at once.
If the fund is ₹2.5 lakh or less: The full amount can be withdrawn in one go.
In Case of the Child’s Death
The full amount saved under the scheme will be handed over to the parents.
Why This Scheme is Special
Most investment schemes require a large initial amount, but the NPS Vatsalya Scheme allows families with low and moderate income to build a strong financial future for their children with small monthly savings.
If you want to make your child financially independent in the long run, this scheme is a smart and affordable option.
