The NPS Vatsalya has received more than 1 lakh enrollment so far. In a recent discussion at an event, Civis Public Consultation Awards 2025, in Delhi, the Pension Fund Regulatory and Development Authority (PFRDA) said that the enrolment under the NPS Vatsalya Scheme has grown to over 1 lakh subscribers. NPS schemes aim to provide financial security in old age by ensuring pensions for subscribers. NPS Vatsalya is an extension of NPS, starting from birth. According to Mohanty, PFRDA has been working to reach people. It is also expanding its intermediary base to improve penetration and spread awareness.
What Is NPS Vatsalya?
It is a long-term scheme which caters to children from 0 to 18 years of age. Under the scheme, parents can save on behalf of their children up to the age of 18, and then the account can be converted into a Tier-I NPS account. PFRDA regulates the scheme and it works under the same framework as the NPS.
Investment Options:
The scheme offers the same investment options and choices as NPS, including auto and active modes of investment, choice of asset class, choice of the central record-keeping agencies (CRAs), Pension Fund Manager, etc.
Minimum Deposit:
The account requires a minimum deposit of Rs 1,000 annually to keep it active. As the account can be opened with banks, post offices, or through an online portal, the ease of opening the account may have proved beneficial for the scheme’s penetration. Further, it is also available for non-resident Indians (NRIs).
Minimum Lock-in:
The other features of the scheme remain the same as NPS, such as a lock-in of three years before a withdrawal is allowed. Such withdrawals are permitted for a maximum of three times and only for certain reasons like specified illness, education, or disability.
Withdrawal Upon Maturity Or Before:
Notably, NPS Vatsalya offers the exit option when the child turns 18. The account can then be closed. The entire accumulated amount can be withdrawn if it is less than Rs 2.5 lakh. In case the amount is more than Rs 2.5 lakh, only 20 per cent can be withdrawn in a lump sum and the remaining 80 per cent can be taken through an annuity.
Tax Benefits:
It offers tax benefits but only under Section 80CCD (1B) of the Income-tax Act, 1961, which is Rs 50,000 and only available in the old tax regime.
However, tax benefits do not seem to be the reason for this scheme’s growth. The reason should be and probably is; planning for the long-term and securing the future of one’s children.
