INTRODUCTION TO THE SCHEME : NPS VATSALYA
Nirmala Sitharaman, finance minister, has introduced a new scheme for wealth creation in the name of Minor boy or girl by their Guardian in the budget 2024. This scheme is made primarily for making a habit for guardians of minor boy or girl to save regularly in their child’s name and ensure their child’s future. The scheme is linked to mutual fund and government bonds where the choice of investment lies with the guardian. “NPS Vatsalya is a Contributory Pension Scheme regulated and administered by Pension Fund Regulatory and Development Authority (PFRDA) designed specifically for all Indian minor citizens till the age of 18 years.” says NPS website. As per the site, three CRA’s have been given the onus of providing seamless services for opening NPS Vatsalya account. NPS Vatsalya account can also be opened by Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs) under the scheme.
OBJECTIVE OF SCHEME: WEALTH CREATION AND COMPOUNDING
NPS Vatsalya aims to generate wealth for minor child during their growth from minor till they become 18 years old. Guardians have the option to create wealth for their child so that they get the benefit of market linked returns as well as security of government scheme. As compared to Sukanya Samriddhi Scheme which is government scheme and invest money is bank linked deposit scheme, this scheme gets an edge over bank deposit schemes which generally offers 7-8 percent return annually. NPS Vatsalya invests money in stock market, government bonds and is a mutual fund linked scheme. This scheme allows minor turned major to remain invested till they attain age of 60 years which allows the money to compound further as the investment duration is higher in the scheme.
DETAILS OF THE SCHEME: KNOW HOW AND WHEN AND WHY ?
NPS Vatsalya, a scheme to cater saving by guardian for minor’s future till he/she attains 18 years of age. Simply speaking, guardian will save/invest in vatsalya scheme as per their goal i.e. for higher education of their child or say his/her marriage. Guardian/parent investing will have the option to withdraw savings and return accumulated till the child attains 18 years of age or they also have the option to not withdraw the amount and let the child invest in it till he attains 60 years and later use the option of getting the corpus as pension and lumpsum.
NPS Vatsalya account can be opened online using any of the link mentioned in the link section of this blog. Guardian will need a birth certificate of minor and pan card as well as Aadhar card of the guardian who will be operating the account on minor’s behalf. Account will be opened in the name of minor child and child after attaining major can invest himself/herself in the same NPS account as this account will be converted to major account and will be acting as normal NPS account. Minimum investment is Rs.1000 per instance excluding applicable charges by POP and there is no maximum limit per financial year i.e for first investment guardian will have to bear total amount of Rs 1271.40/- ( Rs 1000/- invested and Rs 271.40/- POP charges ). After proper registration and payment applicant will get a PRAN number and payment receipt in the form of PDF which can be downloaded and kept for future correpondence. Physical NPS card will be dispatched via India Post to correspondence address mentioned in online application form and same shall reach the address in 10 working days.
If the sum (investment + return) till the day minor turns major is less than 2.5 lakhs then guardian can withdraw all the money if they wish so. But in case the accumulated amount is more than or equal to 2.5 lakhs then guardian will have option to let the amount invested in the scheme or withdraw 20% of the corpus can be withdrawn as lumpsum amount and rest 80% will be mandatorily used to purchase an annuity scheme as per the option available in NPS Site.
Links to open NPS Vatsalya Account :
1.Through Bank of India Website : Open NPS Vatsalya Account using BOI website>>APPLY NOW>>KFINTECH POP
2. Through NPS website : Open NPS Vatsalya account for Minor.
CONCLUSION :
NPS Vatsalya Scheme is a scheme meant for minor’s and guardian who wants to invest long term for their minor child for his/her future can open this account. This scheme allows guardian to accumulate wealth for minor till they attain major and in future major child can continue with the investment journey till he/she attains 60 years of age. After 60 , major can withdraw lumpsum amount upto 40% of corpus and rest 60 % will be used to purchase annuity to obtain regular pension as per annuity plan offered by NPS at that time.
Disclaimer :
This information is only meant for your knowledge and in no way is a advice or investment tip. Please take informed decision before proceeding in the scheme. We don’t endorse or advertise any of the site links or website mentioned in this article as this blog is meant for information of the reader only.
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