NPS Vatsalya is a government scheme, through which lump sum retirement fund and pension can be arranged for the child. Parents can open this account in the name of a child up to 18 years of age and start investing. The minimum limit of investment in this is Rs 1000. There is no maximum investment limit. The account is opened in the name of the child, although the account is looked after by the child’s parents or legal guardians till the age of 18. After turning 18, the child can handle this account himself.
Who can open this account
NPS Vatsalya is a government scheme, through which lump sum retirement fund and pension can be arranged for the child. Parents can open this account in the name of a child up to 18 years of age and start investing. The minimum limit of investment in this is Rs 1000. There is no maximum investment limit. The account is opened in the name of the child, however, till the age of 18, the account is looked after by the child’s parents or legal guardians. After turning 18, the child can handle the account himself.
Understand how the child will become a millionaire when he grows up
If you open a NPS Vatsalya account for your child at the time of his birth and invest Rs. 1000 in it till the age of 18, and from the 19th year till the age of 60, if your child invests Rs. 1000 every month in this scheme, then the total investment till the age of 60 will be Rs. 7,20,000. Suppose he gets a return of 10% on this, then he will get Rs. 3,77,61,849 only as interest and his total corpus will be Rs. 3,84,81,849.
This is how you will get a fund of 2.3 crores and a pension of 1 lakh
In NPS, you have to invest at least 40% in annuity. In such a situation, if your child invests 40 percent in annuity, then he will have to invest Rs 1,53,92,740 in annuity. In such a situation, he will get Rs 2,30,89,109 as retirement fund. If you get a return of 8% on annuity, then you will get Rs 1,02,618 as pension every month.
Where will the account be opened?
NPS Vatsalya account can be opened with big banks, Indian Post. However, this account will be directly regulated by the Pension Fund Regulatory and Development Authority. Those who want to open this account online can go to the eNPS platform of NPS Trust and open the account.
Opportunity for partial withdrawal 3 times till the age of 18
There is an opportunity for partial withdrawal 3 times in this scheme till the child turns 18 years old. However, for this the NPS account should be at least 3 years old. In case of education, treatment of a specific disease and disability up to 75%, the parent can partially withdraw a maximum of 25% of the contribution.
Opportunity to exit at the age of 18
The NPS Vatsalya account is converted into a regular NPS account when the child turns 18. In such a case, the child has to complete fresh KYC within three months. Subscribers can exit NPS at the age of 18 if they want, but the condition is that at least 80% of the corpus has to be reinvested in annuity, while 20% can be withdrawn as a lump sum. If the total amount is less than Rs 2.5 lakh, then the entire amount can be withdrawn at once.
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