NPS Vatsalya Calculator: How one can take NPS retirement corpus from Rs 8.30 cr to Rs 40.9 cr with just 1 trick; see expert calculations

Parents/guardians on behalf of minors/children in the 0-18 year age group can open an account. The account will be opened in the name of the minor, and a PRAN number will also be issued to him. 

The minor's birth certificate, while the guardian/parent's Aadhaar card, driving licence, passport, voter ID, NREGA job card, or National Population Register card for KYC. The guardian/parent's PAN card to track transactions.

The account can be opened with a minimum amount of Rs 1,000. This is also the amount one needs to deposit every financial year to keep their NPS Vatsalya account active.  

The NPS Vatsalya account can be opened online and offline in a nationalised bank, PFRDA-accredited PoS, and post office. 

The NPS Vatsalya account will have auto choice and active choice like any other normal NPS account. By default, NPS Vatsalya account holders will get Moderate Lifecycle Fund, where their equity proportion will be 50 per cent. 

In Auto Choice, they will get a 75 per cent/50 per cent/25 per cent equity option, while in Active Choice, they can have up to 75 per cent equity option. In active choice, they can also pick corporate debt and government security options up to a 100 per cent limit.

On can withdraw only up to 20 per cent corpus at 18. They need to purchase annuity from the rest of the 80 per cent amount. If the total corpus is less than Rs 2.50 lakh, the entire corpus can be withdrawn. 

The NPS Vatsalya account will be converted into a normal NPS account, and the account holder can continue their investment after that. The maximum age to contribute to NPS is 75 years.

According to Max Life Pension Fund Management, if one starts a Rs 5,000 monthly contribution in NPS Vatsalya at age 5 and contributes till 60 (for 55 years total), at a 13 per cent annualised return, they can generate an estimated corpus of Rs 40.9 crore. The invested amount in 55 years will be Rs 33 lakh.

In the second scenario, another person who invests Rs 5,000 monthly from the age of 18 to 60, their expected corpus at 13 per cent annualised return will be Rs 8.3 crore. The invested amount in that period will be Rs 25.20.
Thus, we see that by staying in investment for 13 years more, one can generate a corpus of Rs 32.60 crore extra with investing just Rs 7.80 lakh more.

Chart Courtesy: Max Life Pension Fund Management

Chart Courtesy: Max Life Pension Fund Management