NPS Vatsalya Explained:   A Simple Guide for Parent

What is NPS Vatsalya Scheme?

- The NPS Vatsalya Scheme is a new initiative under the National Pension Scheme (NPS) that allows Indian minors to start saving for retirement.   - Launched in Budget 2024, this government-backed retirement plan is now available for children below 18 years, helping parents secure their child's financial future early.

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Who Can Open an  NPS Vatsalya Account?

- Only parents or legal guardians can open an NPS Vatsalya account for a minor.  - The child will be the sole beneficiary, and the account will be managed by the guardian until the child turns 18 years old.

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Investment Limits in NPS Vatsalya

- You can start investing in NPS Vatsalya with just ₹1,000 per year.  - There’s no upper limit on how much you can contribute, making it a flexible long-term investment option for children.

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Account Continuation After Age 18

- When the child turns 18, the account transitions into a regular NPS Tier-1 account.  - A fresh KYC is required within 3 months to continue the account. After this, the child gains full control.

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Key Benefits of NPS Vatsalya Scheme

- NPS Vatsalya encourages early savings, builds long-term wealth, and ensures financial discipline.  - It provides a steady retirement income via annuity and teaches children the importance of investing.

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Withdrawal Rules Before 18

- Parents can make partial withdrawals after 3 years for education, major illnesses, or disability.  - Up to 25% of the contributions can be withdrawn, up to 3 times before the child turns 18.

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Should Parents Invest in NPS Vatsalya?

- NPS Vatsalya is a strong retirement tool, but parents should also consider flexible options like mutual funds.  - Before investing, ensure you have secured your child's education fund first.

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Better Alternative?  Try Lxme’s Child Education Plan

Explore Lxme’s Child Education Plan—expert-curated, goal-based, and flexible.  Not sure how much to save?  Use Lxme’s Child Education Calculator to find your investment amount instantly.

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