The NPS Vatsalya Yojana is a specialized variant of the National Pension System (NPS) designed exclusively for children.
Under this scheme, parents or legal guardians can open a pension account for their child, which remains active until the child turns 18.
Upon reaching this age, the account seamlessly converts into a standard NPS account.
Features and Benefits
Early Savings and Long-Term Investment
Parents can start saving for their child’s retirement early, allowing the investment to grow over time due to compounding.
Tax Advantages
Contributions to the NPS Vatsalya account are eligible for tax deductions under Section 80C of the Income Tax Act, making it a tax-efficient investment.
Eligibility and Account Opening Process
Eligibility Criteria
The account can be opened by the child’s parent or legal guardian.
The child must be under 18 years of age.
Both Indian citizens, Non-Resident Indians (NRIs), and Overseas Citizens of India (OCI) are eligible.
Steps to Open an NPS Vatsalya Account
Select a Pension Fund Manager (PFM): Choose from the authorized PFMs.
Gather Required Documents: Keep the child’s birth certificate, along with your identity and address proof, ready.
Fill the Application: Accurately complete the NPS Vatsalya application form.
Make the Initial Contribution: Deposit the minimum amount to activate the account.
Investment Options and Benefits
Investment Choices
Equity: Invest in stocks for potentially higher returns, though with higher risk.
Corporate Debt: Invest in corporate bonds, which offer moderate returns with lower risk.
Government Bonds: Opt for government bonds for fixed returns and minimal risk.
Benefits of NPS Vatsalya
Secure Retirement: Establish a robust retirement fund for your child, fostering a saving habit from a young age.
Tax Savings: Enjoy tax benefits under Section 80C.
