Finance Minister Nirmala Sitharaman is set to launch on Wednesday what will be a special National Pension Scheme (NPS) that will allow parents or guardians to make contributions on behalf of their minor children. The NPS Vatsalya scheme will be operated by the Pension Fund Regulatory and Development Authority (PFRDA), the country’s pension fund regulator.
The Finance Minister will also launch a platform that will enable seamless subscription to the NPS Vatsalya programme.
The plan is intended to benefit families of all economic levels.
Here’s what we know about the plan so far:
What time will NPS Vatsalya program be launched?
The launch of the plan will take place on Wednesday 18 September at 2:30 p.m.
Who will benefit?
The scheme will benefit minor children and allow their parents or guardians to create a fund to meet their financial needs from a much earlier age than a regular NPS account. This will allow the funds to grow at a much faster rate and benefit the child till he or she reaches adulthood.
What will happen to the account upon maturity?
On attaining the age of 18, the beneficiary will have the option to convert the Vatsalya NPS account into a regular NPS account.
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At the time of account opening, underage subscribers will be issued Permanent Retirement Account Numbers (PRAN), among other details.
NPS Vatsalya Investment Options
The Vatsalya NPS plan will come with options like flexible contributions and investment choice.
Lockout period
The NPS Vatsalya will have a lock-in period (the period during which it cannot be delivered) of three years.
Premature retirement
After completing the minimum required lock-in period of three years, depositors will be eligible for the option of up to three withdrawals, amounting to up to 25 percent of the corpus.
Minimum investment
The scheme will allow parents or guardians to invest amounts as little as Rs 1,000 per year in favour of underage subscribers.
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