The NPS VATSALYA scheme is a pension scheme for children (who are below 18 years) that enables parents and guardians to start a national pension scheme (NPS) for their children.
In this scheme, parents or guardians can open an NPS Vatsalya account for their children and contribute every month until 18. After the child is 18 years old, that account can be managed independently by the child.
The accrued contribution amount in the NPS VATSALYA scheme will be transferred to this standard nps account when the child reaches the age of 18 years.
What are the features of the NPS Vatsalya Scheme?
Here are the benefits of the NPS Vatsalya Scheme
1. Tax Benefits
NPS Vatsalya scheme provides tax benefits in which Contributions to NPS Vatsalya are eligible for tax deductions under Section 80C of the Income Tax Act, up to ₹1.5 lakhs.
2. High Returns
The amount contributed to NPS VATSALYA will be invested in a pension fund; hence, it offers potentially high returns
3. Secure Future
The scheme provides a secure and stable financial future for children.
4. Flexibility
Minimum Rs 1000 can be contributed by Parents or guardians at their convenience, and the account can be managed online.
5. Partial Withdrawal
The account holder can make a 25% partial withdrawal of the corpus fund for specific expenses such as education or medical treatments
6. Maturity
The NPS VATSLYA account is opened by the child and when the child turns 18 the account will be mature and the corpus can be used for their education, marriage, or other expenses.
7. Low Cost
NPS Vatsalya account has very low charges for account opening and its annual maintenance
8. Professional Management
The account is managed by professional fund managers, ensuring that the investments are made in a prudent and transparent manner.
9. Portability
The account is portable, meaning that it can be transferred to any location in India.
10. Regulated
NPS Vatsalya is regulated by the Pension Fund Regulatory and Development Authority (PFRDA), ensuring that the scheme is safe and secure.
Conclusion
NPS Vatsalya’s plan is indeed beneficial for minors in India. This plan offers a disciplined approach to savings and investments. With the help of tax benefits and regulatory oversight options, the minor can receive a lump sum amount after the age of 60. As life becomes more unpredictable, this plan can contribute to retirement planning and make financial life more secure.
FAQ on NPS VATSALYA SCHEME
What is the NPS vatsalya scheme?
The NPS VATSALYA scheme is a pension scheme for children (who are below 18 years) that enables parents and guardians to start a national pension scheme (NPS) for their children.
Who is eligible for the NPS vatsalya scheme?
Children who are below 18 years of age are eligible for NPS Vatsalya scheme and the child and parents must be Indian citizens
Is NPS vatsalya tax free?
At the age of 60 years subcribers can be withdraw up to 60 percent amount as tax free
