SSY vs NPS Vatsalya For Girl Child: Which scheme can parents with limited investible surplus go for?

In a competitive and fast-paced world, government giving in to the need of the hour has also introduced a market-linked scheme for parents to initiate and start with the fruitful financial planning exercise for their kids. The scheme referred to as NPS Vatsalya as is provided in the Budget document is plan for contribution by parents and guardians for minors will be started. 

On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account.

So as now investors and more typically parents have been given yet another option for planning for their girl child’s finances:

Here’s what experts make of the scheme and suggest:

“The operational details are awaited for the new NPS scheme. But as we wait, the general point to be made is that SSY is purely a debt investment whereas NPS also provides equity exposure. Over the long-term, equity has proven more effective than debt in beating inflation and achieving difficult financial goals,” states AR Hemant, Associate Vice President, BankBazaar.com

With a higher rate of return on equity, your savings will compound faster and thus help you finance your child’s education needs much better. Considering the high inflation associated with education, it may be a smart idea to invest at least in some part your child’s money needs via equity in NPS, he added.

Samir Shah, Head - Online Business, Axis Securities is of the belief that both NPS Vatsalya and SSYhave their own benefits and setbacks. Individuals should choose based on their specific financial objectives. For goals such as child education or marriage, the Sukanya Samriddhi Yojana (SSY) is particularly noteworthy due to its predictable returns and focus on benefiting girls. On the other hand, the NPS Vatsalya scheme may be better for building wealth for a child's future. This scheme allows for investments in equities, potentially offering higher returns, and is available to all genders.

SSY has an age restriction, only being available to girls under ten years old. NPS Vatsalya offers flexibility with equity investments, which can boost returns. However, full withdrawal isn't permitted under NPS Vatsalya, and only partial withdrawals based on contributions are allowed. Additionally, premature withdrawals from NPS Vatsalya are capped at 20 per cent of the corpus, which may restrict the amount available for immediate needs, added Shah.
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