Finance Minister Nirmala Sitharaman Launches NPS Vatsalya Yojana for Minors

Union Finance Minister Nirmala Sitharaman unveiled NPS Vatsalya Yojana, allowing parents and guardians to make contributions for minors. The scheme, featuring flexible investment options, is accessible to families from various economic backgrounds and managed by the PFRDA. This initiative promotes long-term financial planning for children's futures.

Union Finance Minister Nirmala Sitharaman on Wednesday launched the NPS Vatsalya Yojana, a new scheme announced in this year's union budget, aimed at allowing parents and guardians to contribute towards the financial future of minors.

NPS Vatsalya offers flexible contribution and investment options, enabling parents to invest as little as Rs. 1,000 annually in their child's name. The scheme is designed to be accessible to families from all economic backgrounds and will be managed under the Pension Fund Regulatory and Development Authority (PFRDA). Eligibility extends to all minor citizens up to the age of 18 years.

Parents and guardians can initiate an NPS Vatsalya account for children with a minimum yearly contribution of Rs. 1,000. Accounts can be opened through registered points of presence such as banks, post offices, and pension funds, either online or in person. The PFRDA website hosts a comprehensive list of registered points. Additionally, accounts can be opened online via the NPS Trust's eNPS platform.

According to the PFRDA, once the minor reaches 18 years old, the account automatically transitions into a regular NPS Tier I account. During the scheme's launch, Sitharaman highlighted that the NPS Vatsalya promotes a savings habit among parents, securing their children's future.

"You can invest in your child's name up to the age of 18 years through various means including major banks, post offices, or the e-NPS portal. I encourage parents to consider NPS Vatsalya as a meaningful gift for birthdays and other celebrations. It's a lifelong contribution to a child's future," she noted.

Sitharaman also touched on the recently approved Unified Pension Scheme (UPS) for central government employees, set to be effective from April 1, 2025, which combines elements of both the Old Pension Scheme (OPS) and New Pension Scheme (NPS). The UPS assures a pension equivalent to 50 percent of the employee's average basic pay over the last 12 months before retirement, with inflation indexation based on the All India Consumer Price Index for Industrial Workers (AICPI-IW).

She added that state governments may choose to adopt the Unified Pension Scheme, which balances the interests of government employees and taxpayers by preventing heavy future pension bills. Finance Ministry officials stated that the launch of NPS Vatsalya underscores the Centre's commitment to promoting long-term financial planning and security for all.

(With inputs from agencies.)