In the general budget for the financial year 2024-25, Finance Minister Nirmala Sitharaman announced a new pension scheme called NPS Vatsalya.
This scheme allows parents to invest for the secure future of their children. The scheme is set to officially launch on September 18, providing an opportunity for parents to ensure long-term financial stability for their children.
PRAN Number for Minor Subscribers
At the launch event, the Finance Minister will introduce an online platform for easy registration in NPS Vatsalya.
Minor subscribers will also receive their Permanent Retirement Account Number (PRAN) cards, a key feature of this pension scheme.
How the Scheme Works
Parents or legal guardians can invest in NPS Vatsalya in the name of their children. Once the child becomes an adult, the account can be converted into a regular National Pension
System (NPS) account. With a minimum investment of ₹1,000 annually, parents can start securing their child’s future, creating a long-term savings plan.
This scheme, regulated by the Pension Fund Regulatory and Development Authority (PFRDA), is a significant step in India’s pension system aimed at ensuring financial stability for future generations.
Understanding NPS and its Structure
NPS is a government-backed, contributory pension scheme designed to provide a steady income after retirement.
Initially launched for government employees, it was later extended to private sector employees in 2009.
The scheme offers two types of accounts: Tier-1 (retirement account) and Tier-2 (voluntary account).
Tier-1 Account: Requires an initial investment of ₹500 and is meant for long-term retirement savings.
Tier-2 Account: Requires a minimum contribution of ₹1,000 annually and offers more flexible withdrawal options.
Withdrawals and Pension Benefits
At retirement, you can withdraw 60% of your total investment as a lump sum, while the remaining 40% is used to generate a pension.
The more you invest, the higher your pension will be, making NPS a versatile tool for ensuring financial security in old age.
Finance Minister Nirmala Sitharaman has announced the launch of the new pension scheme, NPS Vatsalya, aimed at securing the financial future of children.
This scheme was first introduced in the general budget for 2024-25 and is set to be officially launched on September 18.
Through NPS Vatsalya, parents can invest in their child’s name to ensure long-term financial security.
