The scheme is designed to protect the financial futures of children by enabling parents to contribute early to a pension account. Let's learn more about it.
The highly anticipated NPS Vatsalya Scheme is set to be launched by Finance Minister Nirmala Sitharaman in New Delhi on Wednesday, September 18. Introduced during the Union Budget for 2024-25, the initiative is designed to promote early financial planning for children, offering parents and guardians a systematic approach to saving for their children's futures.
What is NPS Vatsalya?
NPS Vatsalya is designed to enable parents or guardians to open pension accounts for minors, making it one of the first initiatives in India to introduce children to a pension system at an early age. Participants in the scheme will receive Permanent Retirement Account Number (PRAN) cards, signifying their formal enrollment in the National Pension System (NPS).
Know key features of NPS Vatsalya:
1. Financial security:
The scheme aims to secure children's financial futures by allowing parents to contribute early to a pension account. The Ministry of Finance views this initiative as a means to promote long-term wealth accumulation through the benefits of compounding.
2. Contributions:
Parents or guardians can begin saving in their child's name with annual contributions starting as low as Rs 1,000. This affordability makes the scheme accessible to families from diverse economic backgrounds.
3. Transition:
When the child reaches adulthood, their account can be easily converted into a standard NPS account, facilitating a smooth transition into long-term retirement savings.
4. Pension fund:
The scheme will be overseen by the Pension Fund Regulatory and Development Authority (PFRDA), which will ensure security and accountability.
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