NPS Vatsalya is a unique National Pension System (NPS) scheme specifically designed for parents to invest in their children’s future. It offers a secure and tax-efficient way to build a retirement corpus for your child, ensuring financial stability in their golden years. 
Key Features of NPS Vatsalya
- Early Start:
- Parents can start investing in their child’s NPS account from day 1. All minor citizens (age till 18 years) are eligible to open account under this scheme. This allows for significant wealth accumulation over time.
- Flexibility:
- Guardian has the flexibility to choose the investment options within NPS Vatsalya, allowing him/her to tailor NPS investments based on your risk appetite and financial goals. Like regular NPS account, this scheme also offers 4 investmention options of Equity, Corporate Debt, Government Debt, and Alternate Asset. In Equity maximum of 75% can be allocated where as in Corporate Debt and Government Securities upto 100% allocation can be done. Up to 5% can also be allocated to Alternate Asset .
- Investment Choice:
- Like regular NPS investment can be done in Auto Choice or Active Choice. In Auto Choice, guardian can choose between 3 Lifecycle Fund - Aggressive -LC-75(75% equity), Moderate LC-50 (50% equity) or Conservative-LC-25 (25% equity) as per his/her risk appetite. In case guardian is not sure which choice to select, default choice is set to Moderate Life Cycle Fund -LC-50(50% equity).
- In Active Choice, guardian can actively decide allocation of funds across Equity (upto 75%), Corporate Debt (upto 100%) , Government Securities (upto 100%) and Alternate Asset (5%).
- Minimum Contribution:
- When guardian open an NPS Vatsalya account, guardian need to invest at least ₹1,000 per year. Subsequent contributions can be at least ₹1,000 or more. There’s no limit on how much one can invest.
- Pension Fund Selection: Guardian can choose any one of the Pension Fund registered with PFRDA. At present there are 11 pension fund managers available under NPS as listed below:
- SBI Pension Funds Pvt Ltd
- LIC Pension Fund Ltd
- UTI Pension Fund Limited
- HDFC Pension Management Co. Ltd
- ICICI Prudential Pension Fund Management Co. Ltd
- Kotak Mahindra Pension Fund Ltd
- Aditya Birla Sunlife Pension Management Ltd
- Tata Pension Management Private Limited
- Max Life Pension Fund Management Ltd
- Axis Pension Fund Management Ltd
- DSP Pension Fund Managers Private Limited
- Retirement Benefits:
- On retirement, you can withdraw a portion of your accumulated corpus as a lump sum and invest the remaining amount in an annuity plan to receive a regular pension.
- Exit/Withdrawal Option before 18 Years of age:
- Guardian can withdraw up to 25% of the money put into the account after 3 years. This can be done for Education, Illness, or Disability of child. Withdrawl can be done a maximum of 3 times until child turn 18 years old. In case, the accumulated pension wealth available in the account is equal to or less than a two lakh fifty thousand (2.5 lakhs), entire accumulated funds in NPS account can be withdrawn without any tax implications.
How Does NPS Vatsalya Work?
- Account Opening: Parents can open a NPS Vatsalya account for their child by providing the necessary documents and making an initial contribution. For more information please get in touch with us or visit https://link.metainvestment.in/nps-vatsalya. A unique Permanent Retirement Account Number (PRAN) is issued in the minor’s name.
- Regular Contributions: Parents can make regular contributions to the account, either monthly, quarterly, or annually.
- Investment Choice: Parents can choose from a variety of investment options, including equity, corporate debt, government securities, and alternative investments.
- Tax Benefits: Contributions to Vatsalya NPS are eligible for tax deductions under Section 80C of the Income Tax Act.
- Retirement Benefits: Upon retirement, your child can withdraw a portion of the accumulated corpus as a lump sum and the remaining amount as a regular pension.
Benefits of Vatsalya NPS:
- Secure Investment: NPS Vatsalya is a government-backed scheme, providing a secure and stable investment option.
- Tax Benefits: The tax benefits offered by NPS Vatsalya can significantly reduce your taxable income and maximize your savings.
- Long-Term Wealth Creation: Investing in NPS Vatsalya early on can help your child build a substantial retirement corpus over time.
- Financial Independence: Vatsalya NPS can help your child achieve financial independence and enjoy a comfortable retirement.
Can an NRI or OCI open a NPS Vatsalya account?
Yes, an NRI or OCI can open a NPS Vatsalya account for a minor who is a citizen of India.
While the minor must be an Indian citizen, the guardian can be a Non-Resident Indian (NRI) or Overseas Citizen of India (OCI). However, a separate application form is required for NRI or OCI guardians. Additionally, a bank account in India, either a Non-Resident External (NRE) or Non-Resident Ordinary (NRO) account, is mandatory for NRIs or OCIs opening a NPS Vatsalya account. This ensures that the funds can be easily transferred and managed within India.
Charges under the NPS Vatsalya Account
The charges under the NPS Vatsalya account are the same as those for the NPS Tier I for the All Citizen model. See the table below for more details:
| Intermediary | Charge head | Service Charges* |
|---|---|---|
| POP | Initial subscriber registration and contribution upload | Min Rs. 200, Max Rs. 400, (Negotiable within slab) |
| Any subsequent transactions | 0.5% of contribution, Min. Rs. 30 Max. Rs. 25,000, Non-Financial Rs. 30 | |
| Persistency > 6 months & Rs 1000 contribution | Rs 50 p.a. for annual contribution Rs. 1,000 to Rs. 2,999 ; Rs. 75 p.a. For annual contribution Rs. 3,000 to Rs. 6,000; Rs. 100 p.a. for annual contribution above Rs. 6,000 | |
| eNPS (for subsequent contribution) | 0.20% of contribution, Min Rs. 15 and Max Rs. 10,000(Only for NPS-All Citizen and Tier-II Accounts) | |
| Processing Exit/ Withdrawal | 0.125% of Corpus with Min. Rs. 125 and Max. Rs. 500 | |
| CRA | PRA Opening charges | CAMS KCRA PCRA : Rs. 18 , Note: e-PRAN card and digital Welcome kit would be sent through email only. |
| Annual PRA Maintenance cost per account | PCRA: Rs. 69, KCRA: Rs. 57.63, CAMS: 65 | |
| Charge per transaction | PCRA: Rs. 3.75, KCRA: Rs. 3.36, CAMS: 3.50 | |
| Trustee Bank | NIL | |
| Pension Fund | Investment Management Fee | 0.0467% - 0.09% |
| NPS Trust | Reimbursement of Expenses | 0.005 % p.a. of Assets Managed |
| Custodian | Asset Servicing charges | 0.000000001770% p.a. of assets in custody |
NPS Vatsalya is a valuable investment option for parents who want to secure their child’s financial future. By starting early, investing regularly, and taking advantage of the tax benefits, you can help your child build a solid foundation for a prosperous retirement.
