How to apply NPS Vatsalya Scheme

How to apply NPS Vatsalya Scheme

The NPS Vatsalya Scheme, officially known as the National Pension System for the welfare of dependent family members of central armed police forces (CAPFs) and Assam Rifles personnel, was introduced by the Government of India. Here are some key points about the scheme:

Objective: The main aim of the NPS Vatsalya Scheme is to provide financial security to the dependent family members of CAPFs and Assam Rifles personnel in case of the unfortunate demise of the personnel.

Eligibility: The scheme is applicable to dependent family members (spouse and dependent children) of deceased CAPFs and Assam Rifles personnel who were covered under the Central Armed Police Forces (AC) and Assam Rifles Defined Contribution Pension Scheme (ARPAN).

Benefit: Under the scheme, eligible family members receive a monthly pension based on the contributions made by the deceased personnel during their service. The pension amount is calculated based on a defined formula considering the accumulated pension wealth and annuity rates.

Implementation: The NPS Vatsalya Scheme is administered by the Pension Fund Regulatory and Development Authority (PFRDA) in collaboration with the Ministry of Home Affairs.

Financial Security: The scheme provides a reliable source of income to the dependents, ensuring financial stability and support after the death of the personnel.

Portability: The scheme is portable across locations within India, which means that the benefits can be accessed from anywhere in the country.

Overall, the NPS Vatsalya Scheme plays a crucial role in ensuring the well-being of the families of CAPFs and Assam Rifles personnel by offering them a regular pension, thereby alleviating financial uncertainty during challenging times.

Finance Minister Nirmala Sitharaman proposed introducing a new scheme, NPS Vatsalya, in her Budget 2024 speech. This scheme will be a National Pension Scheme (NPS) for minors, allowing parents to contribute a certain amount on behalf of their children towards NPS to secure their future and help them develop a retirement fund.

What is the NPS Vatsalya Scheme?

The NPS Vatsalya Scheme proposed in Budget 2024 enables parents and guardians to start a National Pension Scheme (NPS) for their children. Under this scheme, parents and guardians can open an NPS account for their children and contribute an amount every month or year till the child reaches 18 years.

Once the child reaches the age of majority (18 years), the NPS Vatsalya scheme can be converted into a regular NPS account, which can be managed by the child independently. The accrued contribution amount in the NPS Vatsalya amount will be transferred to the standard NPS account when the child reaches the age of 18 years.

The NPS Vatsalya scheme will be a variant of the existing NPS, tailored explicitly for young individuals. This scheme allows parents to open accounts for their children and contribute towards their retirement savings.

The NPS scheme introduced by the Central Government provides pension income to individuals to support their retirement needs. Thus, the NPS Vatsalya scheme is one of the finest retirement options, guaranteeing the child’s financial security.

Who is eligible for NPS Vatsalya?

All parents and guardians, whether Indian citizens, NRIs, or OCIs, are eligible to open an NPS Vatsalya account for their minor children.

Benefits of NPS Vatsalya Scheme

• The NPS Vatsalya Scheme will promote savings habits in children because when the children turn 18, the account can be converted to a standard NPS scheme. Thus, they can manage it and contribute to the account independently.
• The NPS scheme offers portability, i.e., it allows a person to change jobs without any impact on the NPS account.
• Thus, an NPS Vatsalya account can be converted to an NPS account when the child reaches majority, which can be continued for the child’s lifetime and form a good retirement corpus.
• The NPS Vatsalya account is a good retirement fund option since contributions to the account begin when the child is a minor. Thus, a huge amount will be accumulated at the time of the child’s retirement. At the time of retirement, one can withdraw 60% of the accumulated amount in the NPS account.
• When the child turns major, the NPS Vatsalya account can be converted into a standard NPS account. Thus, when the child grows up and reaches retirement age, he/she can receive good returns to lead a comfortable retirement life, as he/she must allocate 40% of the accumulated NPS amount to an annuity plan.
• Since the NPS Vatsalya account is opened when the child is a minor, it provides the benefit of having a huge corpus amount at the time of retirement. This also emphasises early savings habits in children and pushes them to start investments early in life to get good returns.
• The NPS Vatsalya Scheme teaches children responsible financial management from an early age. It promotes savings habits as they enter adulthood, as the NPS Vatsalya account is converted into a standard NPS account upon attaining 18 years, and the child can start contributing to the account independently.
• NPS Vatsalya offers families a systematic approach to ensuring their children’s future financial security.
• NPS Vatsalya Scheme is a valuable tool for securing a child’s financial stability and developing a retirement corpus.

Applicability of NPS Vatsalya Scheme

The NPS Vatsalya Scheme applies to all parents and guardians of minor children. However, once the child reaches 18 years, the NPS Vatsalya Scheme will be converted to a standard NPS account. This scheme expands the NPS to cover minor children, providing families with a fresh investment option for their children’s financial security and retirement.

How to Open/Apply NPS Vatsalya Scheme?

The Central Government is expected to provide the NPS Vatsalya opening or application process soon. However, it is most likely possible that the Central Government may provide an option to apply for NPS Vatsalya Scheme on the official eNPS website. The Central Government may also provide an option to open and contribute to the NPS Vatsalya Scheme through certain banks’ internet banking portal.