NPS Vatsalya Yojana
Background and Purpose
- NPS Vatsalya is a special initiative under the National Pension System (NPS), regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
- The key idea is to start financial planning for children from a very early age. Just like parents open savings accounts for their kids, here the focus is on creating a pension corpus.
- Eligibility: All minors up to 18 years of age.
👉 Each child gets a Permanent Retirement Account Number (PRAN) in their own name.
Objective
- To create a pensioned society where even children are encouraged to save early.
- To inculcate the habit of long-term saving and financial discipline, ensuring empowerment and financial security in the future.
Nature of the Scheme
- It is a Contributory Pension Scheme → meaning deposits are made regularly, and returns depend on contributions + fund performance.
Role of Guardian
- Since the beneficiary is a minor, the account is operated by a guardian (either natural or legal).
- Special points about guardianship:
- The guardian automatically becomes the nominee. No separate nomination required.
- For NRIs/OCIs, a separate form is needed, and contributions must come from an NRE/NRO account.
- The guardian also decides which Pension Fund Manager will handle the investments.
Contribution Details
- Initial contribution: Minimum ₹1,000 (no upper limit).
- Yearly contribution: Minimum ₹1,000 (no upper limit).
- If the minimum contribution is not made, the account gets frozen.
- The account can be closed only upon subscriber request.
Withdrawal and Exit Rules
(i) Lock-in and Partial Withdrawal
- Lock-in period: 3 years.
- After that, up to 25% of contributions can be withdrawn (maximum 3 times), but only for:
- Education of the child
- Specified illnesses
- Disability
(ii) On Attaining 18 Years of Age
- If corpus > ₹2.5 lakh → 80% must be used to buy an annuity (monthly pension), 20% can be taken as lump sum.
- If corpus ≤ ₹2.5 lakh → 100% can be withdrawn as lump sum.
(iii) On Death
- In case of the minor’s death, the entire corpus goes back to the guardian
Documentation
- For Minor: Proof of Date of Birth (Birth Certificate, School Certificate, etc.).
- For Guardian: Aadhaar / Passport / Voter ID, PAN, and proof of address.
- For NRI/OCI Guardian: NRE/NRO Bank Account of the minor is mandatory.
Grievance Redressal
- PFRDA follows the Redressal of Subscriber Grievance Regulations, 2015.
- A Central Grievance Management System (CGMS) is available online → subscribers/guardians can directly lodge complaints through their NPS account login.
✅ In summary:
The NPS Vatsalya Yojana is a forward-looking scheme that allows parents to start a pension account for their children. It is flexible, regulated, and has specific safeguards (lock-in, partial withdrawals, annuity rules) to ensure that the money truly serves as a retirement-oriented savings tool.