New Delhi, Jan 13 (IANS) The Pension Fund Regulatory and Development Authority (PFRDA) has issued the guidelines for providing comprehensive information on the National Pension System Vatsalya (NPS Vatsalya), a contributory savings and long-term financial security scheme designed exclusively for minors.

In line with the amendments notified to the PFRDA (Exits and Withdrawals under NPS) Regulations, 2015, the NPS Vatsalya Guidelines lay down flexible provisions for long-term financial security of minors, while ensuring continuity of savings on attaining 18 years of age, according to a Finance Ministry statement issued on Tuesday.

The scheme is open to all Indian citizens, including NRI/OCI, below 18 years of age. The account is opened in the name of the minor, who is the sole beneficiary, and operated by the parent or legal guardian.

The minimum initial and annual contribution for the scheme is Rs 250, while there is no maximum limit on contributions. Contributions can also be gifted by relatives and friends.

The guardian can choose any one Pension Fund registered with PFRDA. Partial withdrawal is allowed after the completion of three years from opening the account. The withdrawal can be up to 25 per cent of own contributions (excluding returns) and is permitted for education, medical treatment, and specified disabilities.

Withdrawals from the account are allowed twice before the age of 18 years and twice between 18 and 21 years, subject to conditions. Once the minor turns 18 years of age, a fresh KYC is mandatory under the provisions.

The investment options are available till 21 years of age. The account holder can continue under NPS Vatsalya, or shift to NPS Tier I (All Citizen Model or any other applicable model), or exit with up to 80 per cent as a lump sum, while a minimum of 20 per cent has to be annuitised.

The full withdrawal of the amount is permitted if the corpus is Rs 8 lakh or less.

NPS Vatsalya was announced in the Union Budget for FY 2024-25 and subsequently launched on September 18, 2024, by Finance Minister Nirmala Sitharaman. The scheme enables parents and legal guardians to systematically build long-term savings for their children from an early age, with a provision to shift to the National Pension System upon attaining majority.

The guidelines introduce a targeted incentivisation framework for community-level workers such as Anganwadi workers, ASHAs, and Bank Sakhis, recognising their role in creating awareness and facilitating onboarding, especially in rural and semi-urban areas.

NPS Vatsalya aims to nurture a culture of savings, promote financial literacy from an early age and strengthen long-term financial planning, aligned with the national vision of Viksit Bharat@2047. The guidelines seek to bring clarity, transparency, and uniformity for all stakeholders, while supporting the broader objective of creating a pensioned and financially secure society, the statement added.

--IANS

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