The NPS Vatsalya Scheme, launched in September 2024 under the National Pension Scheme, is exclusively available for minors below 18 years of age. According to reports from Mint, the scheme is regulated and administered by the Pension Fund Regulatory Authority of India (PFRDA) and offers interest between 9.5% to 10%. The sole beneficiary must be an Indian citizen, Non-Resident Indian (NRI) or Overseas Citizenship of India (OCI), while parents or guardians operate the account as nominees. The minimum contribution is ₹1,000 per annum with no upper limit on maximum contributions.
Contributions of up to ₹1.5 lakh made to NPS Vatsalya are exempt for parents/guardians under Section 80CCD(1B) of the Income Tax Act, 1961. As reported by Mint, parents can claim an additional ₹50,000 deduction. The scheme offers three investment choices: Default Choice (Moderate Lifecycle Fund - LC-50 with 50% equity), Auto Choice (Aggressive Lifecycle Fund - LC-75 with 75% equity, Moderate Lifecycle Fund - LC-50 with 50% equity, or Conservative Lifecycle Fund - LC-25 with 25% equity), and Active Choice allowing parents to decide fund allocation across equity (up to 75%), government securities (up to 100%), corporate debt (up to 100%), and alternate assets (up to 5%).
According to Mint reports, parents or guardians can make partial withdrawal of up to 25% of the contributed amount after three years since joining, which can be availed only thrice till the beneficiary turns 18. Withdrawals are permitted for education expenses, disability (over 75%), and health treatment for specified illnesses. The child can choose to exit the scheme once turning 18 or convert it to a regular NPS account, requiring KYC completion within three months and leading to full corpus transfer.
As reported by Mint, upon turning 18, the child can exit the scheme or convert it to a regular NPS account. In case of child's death, the entire corpus is returned to the nominee. If the parent or guardian dies, the other responsible party must be registered with fresh KYC. If both parents die, a legal guardian can continue the scheme without contributions until the child attains majority. The scheme does not require the minor to have a bank account or joint bank account before opening, but such requirements apply during partial withdrawal or exit before age 18.
