Finance Minister Nirmala Sitharaman had announced NPS 'Vatsalya' in the budget for the financial year 2024-25.
Union Finance Minister Nirmala Sitharaman has launched the NPS Vatsalya Scheme in Delhi today (September 18). The Finance Minister had announced this scheme while presenting Budget 2024.
NPS Vatsalya will help ensure financial security of children when they grow up. Parents can invest in this scheme on behalf of children. When the child becomes an adult, the account will be converted into regular NPS. The child will be able to operate it himself.
Union Finance Minister Nirmala Sitharaman launched the NPS Vatsalya Scheme in Delhi.
One should invest in NPS Vatsalya on the birthdays of minor children: Sitharaman Nirmala Sitharaman said at the launch of NPS Vatsalya Scheme that parents and guardians should consider investing in NPS Vatsalya on birthdays and other occasions of their minor children.
NPS helps in creating retirement fund The regular NPS scheme helps in building a retirement fund. NPS contributions are invested in market-linked instruments like stocks and bonds for higher returns.
Important questions related to NPS 'Vatsalya' scheme whose answers you should know…
Question- What is the objective of the scheme? answer- The scheme aims to promote the habit of financial planning and savings from an early age.
Question- Who is eligible for this scheme? answer- All children up to 18 years of age.
Question- In whose name will the account be opened? answer- The account will be opened in the name of the child, but the parents will deposit the money until he/she becomes an adult.
Question- Will the child's parents also be the beneficiaries of this scheme? answer- No, the sole beneficiary of this scheme will be the child in whose name the account is held.
Question- How will NPS Vatsalya Account be opened? answer- Accounts can be opened through Point of Presence (POP) in almost all banks, post offices and pension funds in the country. Users can also open this account through the online platform e-NPS.
Question- What is the minimum investment required? answer- Vatsalya account can be opened with a minimum amount of Rs 1000. There is no upper limit on investment.
Question- Can I withdraw money in between NPS Vatsalya? answer- Yes, after a lock-in period of three years, 25% of the total deposit amount can be withdrawn. But this can be withdrawn only in case of education or illness.
Question, How many times maximum can I withdraw money? answer- A maximum of 25% of the total deposit amount can be withdrawn three times until the child turns 18.
Question- When will it shift to the normal NPS scheme? answer- When the child turns 18 years old, his account can be shifted to NPS Tier-1 i.e. the category of normal people.
Question- Is exit allowed in the middle? answer- No, one cannot exit this scheme until the child turns 18 years old.
A fund of Rs 63 lakh will be created in a SIP of Rs 10,000 All parents or guardians, whether Indian citizens, NRIs or OCIs, can open 'NPS Vatsalya' accounts for their minor children. Suppose your child is 3 years old. If you do a SIP of Rs 10,000 in this scheme, then a fund of about Rs 63 lakh can be accumulated when the child turns 18…
NPS was started in 2004, it 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).
- Investors in the scheme can choose to invest in equity, corporate bonds, government bonds as per their convenience. There is also an option to choose auto-choice life-cycle funds.
- On retirement, a portion of the corpus is used to purchase a policy. Tax deduction is also available under Income Tax Act 80C and 80CCD(1B).
You can get two types of NPS accounts from the bank There are two types of accounts available in NPS. There is a restriction on withdrawal of funds in Tier-I account and the minimum investment is Rs 500. Whereas liquidity facility is available in Tier-II account. Its minimum contribution is Rs 1,000. It can be taken through the bank.
Graphics Source: VaskarAssets
