NPS Vatsalya: Can your child continue this pension scheme after turning 18? Know the investment rules and exit options
Parents who want to start saving for their child’s future can explore NPS Vatsalya, a scheme designed for long-term financial planning for minors. Parents can start contributing to NPS Vatsalya as soon as they open an account for their child.
But what happens when the child turns 18? Who gets the accumulated money, and what options are available for managing or withdrawing it? Here’s what you need to know.
What is NPS Vatsalya?
NPS Vatsalya is a contributory savings scheme for minors under the National Pension System (NPS). It is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).
The account is opened in the minor’s name, with the child as the sole beneficiary. A parent or legal guardian operates it until the child turns 18, and a Permanent Retirement Account Number (PRAN) is issued in the child’s name.
Who can invest and what are the contribution rules?
Indian citizens below 18 years, including eligible Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs), can have an NPS Vatsalya account. The scheme is available irrespective of gender. The parent or legal guardian opens and manages the account on behalf of the minor.
The minimum initial contribution is ₹250, followed by a minimum annual contribution of ₹250. There is no maximum contribution limit. Investments are managed by a pension fund registered with PFRDA. Returns are market-linked and are not guaranteed.
Can you continue NPS Vatsalya after turning 18?
The parent or legal guardian manages the account on behalf of the minor until they turn 18. Upon attaining majority, the subscriber (or child) takes charge of the account and is responsible for its management.
The accumulated contributions, investment returns, and benefits belong solely to the subscriber. The account holder has three options after attaining 18 years of age:
How does NPS Vatsalya work after turning 18?
When the subscriber/ child turns 18, they must complete fresh KYC and update nominee details to take control of the account.
They can continue investing under NPS Vatsalya until age 21, transfer the entire accumulated corpus to an eligible NPS account, or exit subject to applicable rules.
If no option is exercised by age 21, the account automatically moves to a higher-equity scheme under the same pension fund’s Multiple Schemes Framework (MSF).
Disclaimer: This is for informational purposes only. Please visit the official website for the latest updates and applicable rules.
