Union Finance Minister Nirmala Sitharaman will launch the NPS 'Vatsalya' scheme in Delhi on September 18. Business Standard has given this news citing sources. Finance Minister Nirmala Sitharaman announced the scheme while presenting the Budget 2024.
NPS Vatsalya is designed to ensure financial security of children. Because parents can invest in this scheme on behalf of their children when they grow up. Account will be converted to regular NPS on attaining majority.
NPS helps in building retirement fund
NPS 'Vatsalya' can also be converted to a non-NPS scheme when the child turns 18. A regular NPS scheme helps build retirement funds. NPS contribution is invested in market related instruments like stocks and bonds for higher returns.
10,000 SIP will create a fund of 63 lakhs
All parents and guardians, be it Indian citizens, NRIs or OCIs, can open an NPS Vatsalya account for their minor children. Suppose your child is 3 years old. If you in this scheme Rs. 10,000 SIP, when the child turns 18, around Rs. A fund of 63 lakhs can be collected.
NPS, launched in 2004, provides regular income on retirement
- NPS was launched in 2004 to provide retirement income to all citizens of India. It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
- Subscribers can choose their fund allocation between equities, corporate bonds, government bonds as per their choice. There is also an option to choose Auto Choice Lifecycle Fund.
- A part of the corpus on retirement is used to buy an annuity. The benefit of deduction is also available u/s 80C and 80CCD(1B) of the Income Tax Act.
Two types of NPS accounts can be taken from the bank
There are two types of accounts available in NPS. Withdrawal restrictions in Tier I accounts and Rs. 500 is the minimum investment. Whereas Tier II account provides liquidity facility. Its minimum contribution is Rs 1,000. It can be taken through the bank.
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