India’s pension regulator is intensifying efforts to promote the NPS Vatsalya scheme for minors, crossing 490,000 accounts. Recent revisions have further increased contributions and investment flexibility, aiming to boost long-term child savings amid new rules and awareness drives.
India’s pension regulator is pushing to deepen take-up of NPS Vatsalya, the retirement-linked savings plan for minors, after the scheme crossed 490,000 accounts and ₹403 crore in assets under management two years after launch, according to Business Today. The Pension Fund Regulatory and Development Authority has paired the rollout with school programmes, town halls and financial-awareness drives aimed at children, parents, teachers and other stakeholders.
Launched on 18 September 2024, NPS Vatsalya lets parents or legal guardians open and manage an account for a child under 18, while the child remains the sole beneficiary. Contributions are invested through pension funds registered with PFRDA, and relatives or friends can also add gift payments to the account, a feature that appears intended to make the plan more accessible as a long-term savings vehicle.
The scheme was revised on 7 January 2025, with the updated framework taking effect on 23 February 2025. Under the new rules, the minimum contribution was cut to ₹250, while the ceiling on contributions was removed altogether. The changes also gave pension funds more room to design investment options, including strategies with equity exposure of up to 100%, subject to regulatory limits.
Withdrawals remain tightly controlled. According to the updated rules, partial withdrawals are permitted only after the account has been open for three years and only for specified needs such as education, treatment for certain illnesses and disability-related expenses. The number of partial withdrawals allowed during a minor’s membership of the scheme has also been increased from two to four.
When the account holder turns 18, the young saver can keep NPS Vatsalya until age 21, move into an NPS Tier-I account or exit under the applicable rules. If no choice is made between 18 and 21, the account is shifted automatically into a higher-equity option under the same pension fund’s multiple-scheme framework. Business Today also said the scheme carries the tax treatment available under the wider NPS structure, subject to prevailing income-tax rules and conditions.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
