The plan will be unveiled at an event in New Delhi at 3 pm, and 75 locations will join the launch virtually.
What is the Vatsalya National Pension System (NPS)?
NPS Vatsalya is a new pension plan Designed for minors, it allows parents and guardians to invest as little as ₹1,000 a year in a child’s future, making it accessible to families across all income levels.
Through long-term investments, the plan aims to generate wealth with the power of capitalization.
Enrolled children will be provided with PRAN (Permanent Retirement Account Number) cards as part of their initiation into the National Pension System (NPS).
Who can open a NPS Vatsalya account?
Indian citizens can open a NPS Vatsalya Account for their children. Guardians of minors are also eligible.
Once the child turns 18, the account can be seamlessly converted into a regular NPS Tier-I account.
Investment options
Parents can choose from a variety of investment options while managing their child’s account:
Default: Moderate Life Cycle Fund (LC-50) with 50% equity exposure.
Auto-choice: Varies from aggressive (LC-75) to conservative (LC-25).
Active Choice: Guardians can customize fund allocation, with up to 75% equity exposure and various options for corporate debt, government securities and alternative assets.
The minimum contribution is ₹1,000 per year, with no upper limit on contributions.
Profitability and growth potential
According to data from SBI Pension Fund, investing ₹10,000 annually for 18 years can lead to substantial wealth accumulation.
Below are some illustrative examples based on different rates of return (RoR):
Corpus at age 18: ₹5 lakh (RoR 10%)
Corpus Christi at 60 years old:
- ₹2.75 crore (face value of Indian rupee 10%)
- ₹5.97 crore (face value of Indian rupee 11.59%)*
- ₹11.05 crore (face value of Indian rupee 12.86%)
(*These calculations are based on historical data and estimates, and actual returns may vary.)
Rules on death and succession
In the event of the death of a subscriber, the entire corpus is returned to the guardian, who is the registered designee.
If the guardian dies, another guardian can be appointed through a new KYC. If both parents die, a legal guardian can continue contributions or wait until the child turns 18 without making any further investments.
After turning 18
Once the child reaches adulthood, the NPS Vatsalya account is transformed into a regular NPS Tier-I account. The main options include:
Continue Account: Subscribers can continue investing beyond the age of 18 with a new KYC within three months.
NPS Exit: Subscribers can exit by reinvesting 80% of the corpus in an annuity plan and withdrawing 20% as a lump sum.
If the total corpus is less than ₹2.5 lakh, the entire amount can be withdrawn.
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