The Govt. of India launched the NPS vatsalya scheme to secure minor children’s future.

Let us explore the features, benefits, and disadvantages in this article.

NPS Vatsalya Scheme Eligibility, Features, Benefits, and Disadvantages…

• Any Indian citizen below 18 years of age is eligible for this scheme.
• and Non-Resident Indians (NRI) and Overseas Citizenship of India (OCI) who are under 18 years of age can invest in this scheme.
• In addition, parents or guardians can open this account on behalf of minors.
• And parents must operate this NPS vatsalya scheme account till minors become majors.
• CRA will issue a pension retirement account number in the name of a minor child.
• After minor becomes major, this account will be transferred to the NPS Tier 1 account for all citizen models.
• Once major becomes major, fresh KYC must be submitted.
• In addition, within 3 months of minor becoming major, the new KYC must be submitted.
• Moreover, the NPS Tier-1 account will allow fresh investment after KYC submission only.
• After minor becomes major, all the features of the NPS-1 all citizenship model will be applicable to this account.
• Guardian can make contributions to this scheme as per the modes prescribed by PFRDA from time to time.
• In addition, the minimum contribution to this scheme is Rs. 1000.
• And there is no maximum limit.
• Moreover, the initial contribution is Rs. 1000.
• The charges and fees to be levied on the account at any time shall be the same as the charges under the NPS-All Citizen Model as stipulated by PFRDA from time to time.
• The investment of the contribution made into the account, which includes a selection of pension funds, shall be the same as the choices available under the NPS-All Citizen Model as stipulated by PFRDA from time to time.
• Here, in this scheme, partial with drawal facility is available under certain scenarios.
• In addition, those scenarios are: minor education purpose, treatment of specified illness, disability of more than 75%, or the reasons specified by PFRDA.
• Moreover, partial withdrawals of up to 25% are allowed.
• After completing 3 years, partial withdrawal is allowed.
• And the maximum partial withdrawals allowed are three.
• In addition, for every withdrawal, a declaration must be submitted.
• If the minor subsriber child dies, the guardian receives the accumulated pension amount.
• In case the guardian dies, the new guardian has to submit KYC documents.
• In case both parents die, the legal guardian can operate the account with or without contributing to this account.
• However, the subscriber has the option to continue or exit this NPS Vatsalya scheme upon becoming major.
• The charges and fees under this account will be the same as in the NPS all citizenship model.
• In this account, the subscriber has the option to exit once he attains the age of 18 years.
• However, he has to opt for a pension for the 80% of the corpus accumulated.
• If the corpus accumulated is less than 2.5 lakh or the annuity provider is not providing pension, then the subscriber is allowed to withdraw full corpus after 18 years of age.
• The exits and withdrawals under the scheme shall be governed by the provisions of the Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pensions System) Regulations, 2015, and amendments thereto.

• Investment Choices under the NPS Vatsalya Scheme are…

• a) Default Choice: Moderate Lifecycle Fund—LC-50 (50% equity)
• b) Auto Choice: Aggressive Lifecycle Fund – LC-75 (75% equity), Moderate Lifecycle Fund – LC-50 (50% equity), or Conservative Lifecycle Fund – LC-25 (25% equity) and
• c) Active Choice: Parents can actively decide the allocation of funds across equity (up to 75%), government securities (up to 100%), corporate debt (up to 100%), and alternate assets (up to 5%).

How to open the NPS Vatsalya scheme online? …

Parents or guardians have the option to open the NPS Vatsalya Scheme via the eNPS site or at various Points of Presence (POPs), which include pension funds, prominent banks, Indian Post, and other institutions.

1. First, from the eNPS website.

2. Next step, navigate to the page, select the ‘Register Now’ option, and click beneath the ‘NPS Vatsalya (Minors)’ section.

3. Finally, input the guardian’s date of birth, PAN, mobile number, and mail address, then click on ‘Begin Registration’.

4: Enter the one-time password (OTP) that has been received to the mobile number and to the email address of the guardian.

5: After the OTP has been successfully verified, an acknowledgment number will appear on the screen. Then, Please select ‘Continue.’

6. 6: Provide the necessary information for both the minor and the guardian, upload the required documents, and then click ‘Confirm.’

7: Purchase with the initial minimal deposit of Rs. 1,000.

8: The PRAN will be created, and the NPS Vatsalya scheme will be established in the name of the minor child.

Documents need to open the NPS Vatsalya scheme…

To open the NPS Vatsalya Scheme, the following documents must be submitted:

• The guardian’s Aadhaar card
• The guardian’s signature
• Proof of the minor’s date of birth
• A scanned copy of the foreign address proof for OCI subscriber
• In addition, a scanned copy of the foreign address proof for OCI subscribers
• And a scanned copy of bank proof for NRI or OCI subscribers.
• – A scanned copy of bank proof for NRI or OCI subscribers.

Why you should not invest in the NPS Vatsalya Scheme? …

Parents have emotional aspects involved towards their kids.

As a result of this, they will try to invest in this scheme blindly.

But there are other things also that the parents must consider before investing in this scheme.

When it comes to kids future, parents must consider their children higher education, marriage, and care before.

In addition, parents retirement is first, and children’s retirement must be planned later.

If you look at the exit rules, only 25% of the corpus can be redeemed for the purpose of education or 75% of the disability to the minor child.

So, it is very clear the liquidity is too low in this NPS Vatsalya scheme.

And the real problem comes into play when a kid turns 18.

When a minor becomes a major, parents have no right or control over this account.

So, you do not know how your child will run this account when he turns 18 years of age.

By investing in this scheme by default, you can’t bring in the investing habits in your kids.

Because up to kids 18 years of age, it is you who has to invest with your earnings, not your kids.

The funny part is when a child wants to exit from this scheme at age 18.

Here, the child has to opt for pension with 80% of the corpus.

But you really think that your child needs a pension at that age.

And at age 18, a child can redeem 100% of corpus if it is below 2.5 lakh only.

Moreover, nps is not the cheapest product, like most people assume.

Finally, parents can invest in this scheme if they have enough resources for child education, marriage, parents retirement, etc.

Then, parents can invest in this NPS vatsalya scheme.

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