The Business Bytes
New Delhi, September 18, 2024 (TBB Bureau): In a significant move aimed at securing the financial future of children, Finance Minister Nirmala Sitharaman on Wednesday launched the NPS Vatsalya scheme, allowing parents to open pension accounts for their children.
Under the scheme, parents can easily subscribe to NPS Vatsalya online or by visiting a bank or post office. The account requires a minimum contribution of Rs 1,000, with an annual contribution of Rs 1,000 thereafter to maintain the account.
The guidelines for withdrawals from these accounts are still being finalized. Speaking at the launch, Sitharaman highlighted the robust returns offered by the National Pension System (NPS), providing individuals with an opportunity to save and secure a steady income for the future.
NPS Vatsalya is an extension of the existing NPS, specifically tailored for children under the age of 18. Once a child turns 18, their account will automatically convert into a regular NPS account. The pension can only be accessed once the account holder reaches the age of 60.
Sitharaman also underscored the impressive returns that NPS has delivered over the years: 14% on equity investments, 9.1% on corporate debt, and 8.8% on government securities (G-Secs).
Launched as part of the FY25 Budget, the NPS Vatsalya initiative has already seen many prominent financial institutions, including ICICI Bank and Axis Bank, partner with the Pension Fund Regulatory and Development Authority (PFRDA) to support its rollout.
ICICI Bank marked the commencement of the scheme by opening children’s NPS Vatsalya accounts at its Mumbai service center.
Meanwhile, Financial Services Secretary Nagaraju Maddirala assured that the government is open to feedback and suggestions to enhance the scheme.
“Since the announcement of the NPS Vatsalya scheme, we have received several valuable inputs. As we implement the scheme, we are committed to making improvements based on subscriber feedback to address any concerns raised,” Maddirala said.
The NPS Vatsalya scheme is expected to provide parents with a new avenue to save for their children’s long-term financial security.
