In today’s world, some people though earn a lot but sometimes are unable to do something which will secure their children’s future. If you are one of them, then you need not to worry now as the Indian Government has launched the National Pension System Vatsalya (NPS Vatsalya) scheme which strengthens a long-term financial security. Besides, it fosters an early savings habits among the children.
Under the NPS Vatsalya scheme, parents can invest a minimum of Rs 1,000 per month with no upper limit till the child turns 18. The NPS Vatsalya, which also fosters an early savings habits among the children, will also become regular NPS account when the child becomes 18-year-old.
The NPS Vatsalya scheme, is regulated and administered by the Pension Fund Regulatory Authority of India (PFRDA), is the only scheme which gives you the option to plan for retirement of your children.
The other best part of the NPS Vatsalya scheme is that it is also applicable for Non-Resident Indian (NRI) and OCI (Overseas Citizen of India). Though money stays locked-in till child turns 60 also can be used for child’s college education.
Who is eligible for NPS Vatsalya scheme?
- Children upto 18 year old are eligible for the NPS Vatsalya scheme. Their parents have to deposit the money until he/she turns 18 (attains adulthood) after which he/she can start investing.
How to open NPS Vatsalya account?
- The natural/legal guardian of minor children can open the NPS Vatsalya account through registered Points of Presence (PoPs) with the Pension Fund Regulatory and Development Authority (PFRDA).
- These PoPs include India Post, major banks and pension funds. Visit the PFRDA website to find the complete list of registered PoPs.
- The enrolment under the scheme shall also be extended through online platform (eNPS).
- Any other channel allowed by the PFRDA from time to time.
- The NPS Vatsalya account can be opened both online and offline.
Documents required to open NPS Vatsalya account:
- Proof of Date of Birth for the Minor (Birth Certificate, School Leaving Certificate, Matriculation Certificate, PAN, or Passport).
- Guardian’s proof of identity and address, which can include Aadhaar, Driving License, Passport, Voter ID card, NREGA Job Card, or National Population Register documents.
- Guardian’s Permanent Account Number (PAN) or Form 60 declarations, as per Rule 114B.
- If the guardian is an NRI (Non-Resident Indian) or OCI (Overseas Citizen of India), the child’s NRE/NRO Bank Account (solo or joint) is needed.
Contributions:
- Flexible contributions under the scheme can be made by the guardian or the subscriber through various mode of contribution as specified by PFRDA from time to time.
- The minimum contribution is Rs 1000 per annuum and there shall be no limit on maximum contribution.
- The initial contribution for enrollment under the scheme is Rs 1000.
Investment of the contributions into the account:
- The Investment of the contribution made into the account which include selection of pension fund shall be same as the choices available under NPS- All Citizen Model as stipulated by PFRDA from time to time.
Distribution Channel under the scheme:
- The banks, India Post, stock broking houses and any other entity registered as a Point of Presence (POP) under PFRDA (Point of Page 8 of 8 Presence) Regulations, 2018 are eligible to enroll the subscribers under the scheme, either directly or through the means of Retirement Advisers or Pension agents, i.e. Business Correspondents, Insurance Agents, mutual fund distributors engaged by them. b. The enrolment under the scheme shall also be extended through online platform (eNPS). c. Any other channel allowed by the PFRDA from time to time.
Exit and withdrawal from the NPS Vatsalya account:
- For the purpose of education of subscriber, treatment of specified illnesses, disability more than 75%, or the reasons as may be specified by PFRDA in the interest of the minor subscriber under the regulations, the guardian shall be allowed to partially withdraw upto 25% of subscribers’ contribution excluding returns thereon after minimum 3 years from the date of opening of account, for maximum three times till the subscriber attains 18 years of age. Such facility shall be made available on declaration basis.
- In the case of death of the minor subscriber, the entire accumulated pension wealth to be paid to the guardian.
- In case of the death of the guardian registered under the account, another guardian to be registered on behalf of minor subscriber by submitting the KYC documents as specified by the PFRDA from time to time.
- In case of death of both the parents, the legally appointed guardian may continue the account with or without making contributions to the account, and upon attainment of 18 years of age by the subscriber, the subscriber shall have an option to continue or exit from the scheme.
- The subscriber shall be allowed to exit only upon attainment of age of 18 years. On such exit, at least eighty percentage of accumulated pension wealth available in the account shall be utilized for purchase of annuity and remaining balance shall be paid in lump sum.
- In case, the accumulated pension wealth available in the account is equal to or less than a two lakh fifty thousand, or purchase of annuity is not available from empaneled Annuity Service Providers (‘ASPs’), the subscriber shall have option to withdraw the entire accumulated pension wealth.
- The exits and withdrawals under the scheme shall be governed by the provisions of the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pensions System) Regulations, 2015 and amendments thereof.