Finance Minister Nirmala Sitharaman launches NPS Vatsalya; parents can open pension a/c for children

Finance Minister Nirmala Sitharaman on Wednesday launched the NPS Vatsalya scheme, which will allow parents to save for their children’s future by investing in a pension account.

Parents can subscribe to NPS Vatsalya online or visiting a bank or post office. The minimum contribution to open Vatsalya account is Rs 1,000. Subscribers will have to contribute Rs 1,000 annually thereafter. The guidelines for withdrawal from NPS accounts are being finalised.

Launching the scheme, Sitharaman said NPS has generated very competitive returns and offers the option to people to save while ensuring future income.

NPS Vatsalya is an extension of the already existing NPS to children. In the last 10 years, NPS has 1.86 crore subscribers with an Asset Under Management (AUM) of Rs 13 lakh crore.

Children below the age of 18 years can open NPS Vatsalya account, which will automatically get converted to regular NPS account on completion of 18 years of age. Pension will come from the account only upon attainment of 60 years of age.

NPS has generated 14 per cent, 9.1 per cent, and 8.8 per cent returns for investments in equity, corporate debt and G-Secs, respectively, Sitharaman said. NPS Vatsalya was announced in the FY25 Budget presented in July.

Many lenders, including ICICI Bank and Axis Bank, have joined hands with the PFRDA to launch National Pension Scheme (NPS) - Vatsalya.

‘India will continue to grow at fast pace’

• FM Nirmala Sitharaman said India was standing out globally in terms of economic growth and will continue to do so in the next few years.
• Sitharaman said Unified Pension Scheme (UPS) balances the interests of government employees as well as taxpayers by not overburdening future generations with heavy pension bills.
• The Indian economy grew at 8.2 per cent in 2023-24. The Economic Survey 2023-24 tabled in Parliament in July projected the economy to clock 6.5-7 per cent growth this fiscal year.
• “We are much better off than many other countries, even if they are advanced countries, today they are struggling to grow...,” she said.