NPS Vatsalya: Nirmala Sitharaman says intergenerational faith vital for growing India

NPS Vatsalya Scheme: Finance Minister Nirmala Sitharaman launched the NPS Vatsalya Scheme, announced in Budget 2024-25.

NPS Vatsalya Scheme: The government has taken a significant step towards strengthening the financial future of the next generation. The scheme allows parents to open pension accounts for their children. An online platform will also be launched for easier subscriptions.

According to the Finance Ministry, minor subscribers will receive a Permanent Retirement Account Number under this scheme. Parents can invest in these pension accounts to build a sizable corpus for their children over time.

Annual investment of Rs 1,000

The NPS Vatsalya Scheme offers flexible investment options, allowing parents to contribute Rs 1,000 annually. It is accessible to families across all income groups.

This initiative aims to secure the financial future of children and is a key step in India's pension system, managed by the Pension Fund Regulatory and Development Authority (PFRDA). The launch of this scheme reinforces the government's commitment to promoting long-term financial security for all.

Finance Minister Nirmala Sitharaman highlighted the swift implementation of the NPS Vatsalya Scheme, which was announced in the July Budget and launched within a short span. This reflects the government's efficient working style and aligns with the Prime Minister's vision of a developed India.

Sitharaman emphasised the importance of "intergenerational faith" in a growing India, stressing the need for financial independence to secure a dignified future. Just as today’s senior citizens benefit from their pensions, the NPS Vatsalya will instill financial responsibility in the next generation.

For now, all NPS rules will apply to NPS Vatsalya. The scheme includes a provision allowing parents to withdraw 25% of the corpus if needed. There is also an ongoing discussion about additional exit options, and several suggestions have been received to improve the scheme's flexibility and offerings.

The National Pension System (NPS) has seen a strong growth rate, with a current CAGR of 34%. NPS Vatsalya aims to foster a savings mindset among both parents and children, raising awareness of its long-term benefits. The scheme offers an average return of 9.5% and can be accessed through banks, post offices, or online portals.