NPS Vatsalya: Who can make gift contributions to a child’s account? Explained

The National Pension Scheme’s spin-off for children, known as the NPS Vatsalya Scheme, allows parents to open and operate an account for their minor child, till such time that the sole beneficiary attains majority at 18 years of age.

Launched in September 2024, it is regulated and administered by the Pension Fund Regulatory Authority of India (PFRDA) and allows parents to secure their child’s financial future.

NPS Vatsalya: Check investment choices

– Conservative Life Cycle Fund (LC25),

– Moderate Life Cycle Fund (LC50 – Default),

– Aggressive Life Cycle Fund (LC75).

– Equity (E): Maximum 75%

– Corporate Bonds (C): Up to 100%

– Government Securities (G): Up to 100%

– Alternate Assets (A): Maximum 5%

Contributions to the NPS Vatsalya account

– Contributions under the scheme can be made by the guardian or the subscriber through various modes of contribution as stipulated by PFRDA from time to time.

– The minimum contribution for account opening and annual contribution shall be ₹1,000. However, as the objective of the scheme is to obtain a compounding effect for the long-term savings, it is advisable to contribute as much as possible, depending on the capacity to pay or contribute.

– The parent or guardian needs to exercise the following choices at the time of opening of the account:

• Choice of CRA (Central Recordkeeping Agency): From the registered CRAs with PFRDA.
• Choice of Pension Fund (PF): From the registered PFs with PFRDA.

Who can make gift contributions?

According to an NPS circular, in addition to the child’s parents or guardians, their relatives and friends may also make “gift contributions” to a subscriber by remitting the contributions to the NPS Vatsalya account.

Parents, guardians, relatives and friends may contribute through any of the following modes:

• Physical mode: By visiting any registered service provider (PoP) and depositing a cheque / cash along with the NPS contribution slip.
• Online facility provided by PoPs
• eNPS platform of NPS Trust
• Any other electronic mode approved by PFRDA.

Disclaimer: This story is for educational purposes only. We advise investors to check with certified experts before making any investment decisions.