Finance Minister Nirmala Sitharaman has launched the ‘NPS Vatsalya’ scheme, announced in the 2024 budget. This plan allows parents to invest in a pension account for their children’s future. NPS Vatsalya is an extension of the existing NPS scheme, tailored for children.
The NPS Vatsalya Scheme functions similarly to the National Pension System (NPS), helping individuals build retirement funds through contributions during their career.
This plan allows parents to invest in a pension account for their children’s future.
Historical Perspective
Prior to 2009: Three schemes were implemented by the Ministry:
– Integrated Program for Street Children
– Scheme for Assistance to Homes for Children
– Juvenile Justice Program
2010: Schemes merged into the Integrated Child Protection Scheme (ICPS)
2017: ICPS renamed as Child Protection Services Scheme
2021-22: Reintroduced as Mission Vatsalya
Objectives
– Ensure a healthy and happy childhood for every child
– Create a sensitive, supportive, and integrated ecosystem for child development
– Assist states/UTs in implementing the Juvenile Justice Act, 2015
– Achieve Sustainable Development Goals (SDGs)
Components of Mission Vatsalya
– Strengthening statutory bodies
– Enhancing service delivery structures
– Improving institutional care and services
– Promoting non-institutional community-based care
– Providing emergency services
Types of Non-Institutional Care for Children
– Economic Empowerment:
– Government-funded economic empowerment
– Private-funded economic empowerment
– Foster Care:
– Non-related family takes care and rehabilitation responsibility
– Financial assistance provided to foster parents
– Adoption:
– Finding suitable families for legally free children
– Central Adoption Resource Authority (CARA) facilitates adoption process
Post-Adoption Care
– Financial assistance for children leaving child care institutions at 18
– Support extended until 21 (possibly 23) years old
Mission Vatsalya: A Protection For India’s Future
Finance Minister Nirmala Sitharaman has launched the ‘NPS Vatsalya’ scheme, announced in the 2024 budget. This plan allows parents to invest in a pension account for their children’s future. NPS Vatsalya is an extension of the existing NPS scheme, tailored for children. Parents can join online or through banks/post offices. ICICI Bank and Axis Bank have also initiated pension schemes.
Parents can withdraw up to 25% of the total investment after three years of depositing money, considering education or medical expenses. This facility is available only three times until the child turns 18.
Finance Minister Nirmala Sitharaman recently launched the NPS Vatsalya Scheme to secure children’s financial futures. The scheme includes an online investment platform and an informational booklet. Under this scheme, minor subscribers will receive a Permanent Retirement Account Number (PRAN) card.
The NPS Vatsalya Scheme functions similarly to the National Pension System (NPS), helping individuals build retirement funds through contributions during their career.
Finance Minister Nirmala Sitharaman launched the NPS Vatsalya scheme on Tuesday, announced in the 2024 budget. This plan allows parents to invest in a pension account for their children’s future. Key features:
– Parents can invest online or through banks/post offices.
– ICICI Bank and Axis Bank offer this pension scheme.
– After three years, parents can withdraw up to 25% of total investment for education/medical expenses, up to three times until the child turns 18.
– Minimum annual deposit: ₹1,000; no maximum limit.
– Account can be opened for minors with PAN and Aadhaar cards.
How to Open NPS-Vatsalya Account
The NPS-Vatsalya scheme is a financial investment option allowing parents or guardians to secure their children’s financial future by depositing funds on their behalf.
Eligibility for NPS Vatsalya Scheme
Any Indian citizen below 18 years old can join, with mandatory KYC documentation.
Benefits
– Secure financial future and handle uncertainties
– Develop financial responsibility and understanding
– Encourage long-term investments
– Flexibility in future financial planning
– Understand compounding power
Withdrawal
Before the child turns 18, partial withdrawals are allowed:
– 25% of total contributions after 3 years from account opening
– Limited to 3 instances until the child turns 18
– Specific cases like medical treatment, disability (over 75%), education
NPS Vatsalya Scheme: Post-18 Options
After attaining 18 years, members can:
– Continue contributions to the NPS account
– Convert NPS Vatsalya to a regular NPS account
– Update KYC within 3 months
– Close the NPS Vatsalya account
Withdrawal Rules
– 80% of the corpus must be reinvested in an annuity plan
– Remaining 20% can be withdrawn
– If total corpus is ₹2.5 lakh or less, entire amount can be withdrawn
Note:
– Regular NPS requires 40% of corpus for annuity purchase at retirement
– Annuity provides monthly pension post-retirement
FAQ Related to Vatsalya Scheme
Q1: What is NPS Vatsalya Scheme?
Answer: NPS Vatsalya Scheme is a pension scheme that allows parents to invest for their children’s future.
Q2: Who is eligible for NPS Vatsalya Scheme?
Answer: Any Indian citizen below 18 years of age can join the NPS Vatsalya Scheme.
Q3: How to invest in NPS Vatsalya Scheme?
Answer: Investment can be made online or through banks/post offices.
Q4: What is the minimum investment required for NPS Vatsalya Scheme?
Answer: The minimum investment required is ₹1,000.
Q5: What are the withdrawal rules for NPS Vatsalya Scheme?
Answer: Up to 25% of the total investment can be withdrawn after 3 years, maximum 3 times, until the child turns 18.
Q6: What are the benefits of NPS Vatsalya Scheme?
Answer: Benefits include securing children’s future, teaching financial responsibility, and providing long-term investment options.
Q7: What options are available after the child turns 18?
Answer: After 18, members can continue contributions, convert to a regular NPS account, or close the account.
Q8: What documents are required for NPS Vatsalya Scheme?
Answer: Required documents include PAN card, Aadhaar card, and other necessary documents.
Q9: How does investment work in NPS Vatsalya Scheme?
Answer: Investment can be made online or offline through authorized institutions.
Q10: What tax benefits are available for NPS Vatsalya Scheme?
Answer: Tax benefits are available under the Income Tax Act, 1961.
Q11: How to open an NPS Vatsalya account?
Answer: Account can be opened online or through authorized institutions.
Q12: What is the maximum investment limit for NPS Vatsalya Scheme?
Answer: There is no maximum investment limit.
Q13: What management fees apply to NPS Vatsalya Scheme?
Answer: Management fees are a small percentage of the investment.
Q14: What is the investment tenure for NPS Vatsalya Scheme?
Answer: Investment tenure is until the child turns 18.
Q15: How to modify investment in NPS Vatsalya Scheme?
Answer: Investment can be modified online or offline through authorized institutions.
