Everything About NPS Vatsalya Scheme: A Smart Child Investment Plan

Planning for your child's future is a priority for every parent, and financial security plays a pivotal role in that preparation. The NPS Vatsalya Scheme, designed specifically for minors, offers a self-contributory pension system comprehensive to ensure a smooth transition to a financially secure adulthood. Regulated by the Pension Fund Regulatory and Development Authority (PFRDA), the scheme provides flexibility, investment options, and long-term benefits ideal for building a stable financial foundation for your child.

What is the NPS Vatsalya Scheme?

The NPS Vatsalya Scheme is a child-focused self-contributory pension system that ensures minors have a structured financial roadmap. The scheme is designed to build wealth through contributions and investments while transitioning into a robust pension plan once the child reaches 18 years of age. Opting for NPS for children, like the Vatsalya Scheme, helps parents create a strong financial foundation for their kids’ futures, ensuring stability and peace of mind.

The scheme offers flexibility in contributions and investment choices, empowering guardians to make sound financial decisions for their children. When the minor turns 18, the account smoothly transitions into a National Pension System (NPS) Tier-I account, paving the way for a structured pension plan. The NPS Vatsalya Scheme is not only about saving for the present but also securing your child's future well-being.

Key Features of the NPS Vatsalya Scheme:

• A self-contributory pension system
• Open to all minors up to 18 years of age
• Flexible investment options and contributions
• Transition to NPS Tier-I upon reaching adulthood

Eligibility Criteria for the NPS Vatsalya Scheme

To open an NPS Vatsalya Scheme account, the applicant must meet the following eligibility requirements:

Who Can Apply?: All minor citizens of India who are under 18. The account is managed by a guardian, who serves as the custodian until the minor turns 18, at this point, the account transitions into the child's name.
Guardian's Role: The guardian manages the contributions and investments and ensures that the account remains active and adequately funded.

How to Open an NPS Vatsalya Account

At UTI PFL, we prioritise making the process of opening a POP account as seamless as possible. Visit any of our branches, and our dedicated team will assist you every step of the way to ensure a smooth account opening experience. Whether you're new to the process or need guidance, UTI is here to help you get started with ease and efficiency.
To open your NPS Vatsalya Account offline, visit your nearest UTI Pension branch today.

Documents Required

To open an NPS Vatsalya Account, you need the following documents:

Proof of the Minor’s Date of Birth:

• Birth Certificate
• School Leaving Certificate
• Matriculation Certificate
• PAN Card
• Passport

Guardian’s KYC Documents:

These include proof of identity and address, such as:

• Aadhaar
• Driving Licence
• Passport
• Voter ID card
• NREGA Job Card
• National Population Register

Contribution Details

The NPS Vatsalya Scheme offers flexibility when it comes to self-contributions. The minimum annual contribution is Rs.1,000 per annum, and there is no upper limit on how much you can contribute. This allows parents and guardians to adjust their investments based on their financial capability and goals for their children.

Investment Choices

The NPS Vatsalya Scheme provides three investment options to choose from, offering a range of asset class allocation to suit the guardian’s risk tolerance and financial goals:

Default Choice: The Moderate Life Cycle Fund (LC-50), which allocates 50% of the investments to equity.
Auto Choice: This option automatically adjusts the equity exposure based on the child’s age, with three sub-options:

• Aggressive Life Cycle Fund (LC-75): 75% equity allocation.
• Moderate Life Cycle Fund (LC-50): 50% equity allocation.
• Conservative Life Cycle Fund (LC-25): 25% equity allocation.

Active Choice: This allows the guardian to actively manage the investment mix with the following allocation limits:

• Equity (up to 75%)
• Corporate Debt (up to 100%)
• Government Securities (up to 100%)
• Alternate Assets (maximum 5%)

Withdrawal, Exit, and Death Provisions

The NPS Vatsalya Scheme offers multiple provisions regarding withdrawal, exit, and death benefits:

a) Partial Withdrawal

Guardians can withdraw up to 25% of the contributions for educational purposes, specific illnesses, or disabilities. This can be done a maximum of three times till subscriber attains 18 years of age, subject to a lock-in period of three years.

b) Exit Options (At 18 Years)

Corpus above Rs. 2.5 Lakhs: 80% of the corpus is used to purchase an annuity, while the remaining 20% can be withdrawn as a lump sum.
Corpus below Rs. 2.5 Lakhs: The entire amount can be withdrawn as a lump sum.

c) Death Provisions

1. Death of minor subscriber: In the unfortunate event of the minor's death, the entire corpus will be returned to the guardian.
2. Death of guardian: If the guardian passes away, a new guardian must be registered on behalf of the minor subscriber by submitting the KYC documents as specified by the PFRDA from time to time. In cases where both parents have died, the legally appointed guardian can maintain the account, with or without making additional contributions. Upon reaching 18 years of age, the subscriber has the option to either continue or exit the scheme.

Conclusion

The NPS Vatsalya Scheme is an excellent tool for securing your child’s financial future, offering flexibility, and long-term investment opportunities. By enrolling in this scheme, you can ensure a seamless transition to a pension plan, providing your child with lifelong financial security.