2024-09-19 04:12:23
New Delhi: Now minors i.e. children below 18 years can also open an account in National Pension Scheme or NPS. Yes, private sector Axis Bank has joined hands with Pension Fund Regulatory and Development Authority (PFRDA) to launch National Pension Scheme (NPS) Vatsalya. This is a scheme focused on securing the financial future of children below 18 years of age.
It was announced in the budget
Finance Minister Nirmala Sitharaman had announced this during the Union Budget 2017. The scheme was launched at an event held here today. On this occasion, Sitharaman handed over a symbolic Permanent Retirement Account Number (PRAN) to Lamba Karnam Aditri of Hyderabad, who was selected by Axis Bank. It is believed that this initiative will empower families to plan for long-term financial security for children.
Worries about the future since childhood
This new program represents a significant advancement in India’s pension system, aimed at protecting children’s financial future by starting early. The scheme will be managed by the Pension Fund Regulatory and Development Authority (PFRDA).
What is NPS Vatsalya
NPS Vatsalya will allow parents to save for their children’s future by investing in a pension account and ensure long-term wealth with the power of compound interest. NPS Vatsalya offers flexible contribution and investment options, allowing parents to invest as little as Rs 1,000 annually in the name of the child, thus making it accessible to families from all economic backgrounds.
what will happen after 18 years
This account will be opened in the name of a minor, so a provision has been made for it to be operated by a guardian. The only beneficiary of this scheme will be the minor in whose name this account has been opened. On attaining the age of 18 years by the person in whose name this account has been opened, this account can be easily transferred to NPS Tier-I.
You will get the benefit of all investment facilities
In NPS Vatsalya scheme also all the investment facilities can be accessed through Auto Choice / Active Choice. By encouraging early investment and providing a structured savings plan, NPS Vatsalya aims to build a strong financial foundation for young individuals. This innovative approach not only ensures that children get the benefits of disciplined savings and compounding over time, but also instills a sense of financial responsibility from an early age. Can withdrawal be made from NPS Vatsalya?
According to the Central Bank of India website: ‘Withdrawals up to 25% of the contribution are allowed after a lock-in period of 3 years for education, specified illness and disability, that too a maximum of three times. However, withdrawal is allowed on the child attaining the age of 18 years.