The Central Government has introduced the NPS Vatsalya Scheme to promote early financial planning for children. It is a pension scheme designed to secure the financial future of minors (children aged 0-18 years). Parents and guardians across the country have shown great interest in this scheme, which is now available through leading banks, including Federal Bank, SBI, ICICI, and others.
Let’s break down the key details, requirements, and steps to open an NPS Vatsalya account for your child.
What Is the NPS Vatsalya Scheme?
NPS Vatsalya is an initiative under the National Pension System (NPS) aimed at securing the financial future of minors. It allows parents or guardians to open a pension account in the name of a child aged 0-18 years, which will help them accumulate wealth over time through compound interest.
The key features of this scheme include:
- Eligibility: Children aged 0 to 18 years
- Minimum Contribution: ₹1,000 annually
- Pension Benefit: Available after the child turns 60
- Withdrawal Option: After the child reaches 18 years, 25% of the deposited amount can be withdrawn
- Flexible Investment Options: Parents can choose between active and auto investment options
Why Is NPS Vatsalya Important?
The primary aim of this scheme is to help families secure their children’s financial future and build a strong foundation for retirement. The power of compounding allows for significant wealth accumulation over time, even with modest annual contributions.
Parents from all income groups can take advantage of this scheme to ensure that their children have long-term financial security. The scheme promotes early saving habits and financial planning, essential for securing a strong financial future.
Steps to Open an NPS Vatsalya Account for Your Child
Whether you wish to open an account online or by visiting your nearest bank, the process is simple. Below is a detailed guide on how to open an NPS Vatsalya account.
1. Choose the Right Bank or Platform
You can open an NPS Vatsalya account at various banks like:
- Federal Bank
- State Bank of India (SBI)
- ICICI Bank
- Axis Bank
- Canara Bank
- Central Bank of India
- Indian Overseas Bank
- Bank of Maharashtra
Alternatively, you can also open an account through the nearest post office or online platforms like e-NPS or NPS Trust portals.
2. Gather the Necessary Documents
To open an NPS Vatsalya account, you need the following documents:
- Child’s Proof of Age: Birth certificate, matriculation certificate, or school leaving certificate
- Parent/Guardian’s ID Proof: PAN card, Aadhaar card, passport, or driving license
- Address Proof: Any official document that confirms the current address
- Mobile Number and Email ID: Contact information for registration
- Photograph: Recent passport-size photo of the parent/guardian and the minor child
3. Visit the Bank or Use an Online Platform
You can open the account in person at any branch of your chosen bank or through online platforms. If applying online, visit the e-NPS portal or other authorized central record-keeping agencies like:
- Protean
- KFintech
- CAMS NPS
4. Fill Out the Application Form
Fill in the necessary details of the parent or guardian, followed by the details of the minor child:
- Parent/Guardian Details: Name, date of birth, PAN, mobile number, and email ID
- Child’s Details: Name, date of birth, and other basic details
5. Complete the KYC Process
Submit the required KYC (Know Your Customer) documents, such as proof of identity and address. The parent/guardian’s Central KYC Registry (CKYCR) records will be downloaded for identity verification.
6. Select Investment Options
You can choose between two investment options for the NPS account:
- Active Option: You select the percentage allocation for different asset classes.
- Auto Option: The allocation is decided based on the age of the child and automatically adjusted over time.
7. Submit the Application
After filling in all the required details and choosing the investment option, submit the application form online or at the bank. You will receive a Permanent Retirement Account Number (PRAN), which will be used for all future transactions.
8. Receive Confirmation
Once the application is processed, you will receive a confirmation email or SMS. Keep this confirmation handy for future reference.
Benefits of Opening an NPS Vatsalya Account
Opening an NPS Vatsalya account offers multiple benefits for parents and children alike. Let’s explore these benefits:
1. Long-Term Wealth Creation
With the power of compounding, even small contributions can grow into substantial amounts over time. This helps parents build a strong financial foundation for their child’s future.
2. Flexible Investment Options
The scheme offers flexible investment choices between active and auto investment options, allowing parents to manage their child’s future according to their financial goals.
3. Tax Benefits
Parents or guardians opening an NPS Vatsalya account can also enjoy tax benefits under Section 80CCD(1) and 80CCD(1B) of the Income Tax Act, making it an excellent investment option for tax saving.
4. Easy Withdrawal
Once the child turns 18, up to 25% of the deposited amount can be withdrawn, allowing for flexibility in managing the child’s financial needs.
Which Banks Offer NPS Vatsalya Accounts?
Several major banks and institutions offer the NPS Vatsalya scheme. Some of these include:
- State Bank of India (SBI)
- ICICI Bank
- Axis Bank
- Canara Bank
- Central Bank of India
- Indian Overseas Bank
- Bank of Maharashtra
You can also open an account at the nearest post office or through the e-NPS portal online.
