The Pension Fund Regulatory and Development Authority has issued the NPS Vatsalya Scheme Guidelines 2025, setting out the operational framework for the National Pension System Vatsalya. The scheme is a contributory long-term savings and pension product designed exclusively for minors. It aims to help parents and legal guardians build financial security for children from an early age, with a smooth transition to the National Pension System after the child attains majority.
What NPS Vatsalya Is
NPS Vatsalya was announced in the Union Budget for FY 2024-25 and launched on 18 September 2024. It is meant for Indian citizens below 18 years of age, including NRI and OCI minors. The account is opened in the name of the minor and operated by the guardian. The minor remains the sole beneficiary.
Contribution and Account Features
- The minimum initial and annual contribution is ₹250.
- There is no maximum contribution limit.
- Contributions can also be made as gifts by relatives and friends.
- The guardian may choose any one pension fund registered with PFRDA.
Withdrawal and Transition Rules
- Partial withdrawal is allowed after three years from account opening.
- Up to 25% of own contributions can be withdrawn, excluding returns.
- Withdrawals are permitted for education, medical treatment and specified disabilities.
- Such withdrawals are allowed twice before 18 years and twice between 18 and 21 years, subject to conditions.
- On attaining 18 years, fresh KYC is mandatory.
- Up to 21 years, the subscriber may continue under NPS Vatsalya, shift to NPS Tier I, or exit under prescribed rules.
Exit Provisions and Wider Significance
- On exit, up to 80% may be taken as lump sum.
- At least 20% must be annuitised.
- Full withdrawal is allowed if the corpus is ₹8 lakh or less.
- The guidelines also provide targeted incentives for community-level workers such as Anganwadi workers, ASHAs and Bank Sakhis.
- The scheme supports early savings habits, financial literacy and long-term retirement planning, aligned with the vision of Viksit Bharat@2047.