Context:
Recently, the union Finance Minister officially launched the NPS Vatsalya scheme.
Relevance:
GS II: Government Policies and Interventions
Overview of NPS Vatsalya Scheme:
- Tailored extension of the National Pension Scheme (NPS) specifically designed for children.
Eligibility Criteria:
- Eligible participants include all minor citizens under the age of 18.
- Both the child and the parent must be Indian citizens and meet Know Your Customer (KYC) standards.
- Accounts are to be registered under the child’s name and managed by a parent or guardian, making the minor the beneficiary.
- Registration for the scheme is available through several authorized channels including major banks, India Post, Pension Funds, and e-NPS, under the oversight of the Pension Fund Regulatory Authority of India (PFRDA).
- Contributions: Starts at a minimum of Rs 1000 annually with no upper limit set for contributions.
Investment Options and Returns:
- PFRDA offers a diverse range of investment opportunities in government securities, corporate bonds, and equities, tailored to the risk tolerance and expected returns of the subscriber.
Conversion and Maturity:
- Upon reaching the age of majority, the account seamlessly transitions into a standard NPS account.
Withdrawal Guidelines:
- After maintaining the account for three years, partial withdrawals up to 25% of the corpus are permitted for specific needs such as education, medical expenses for severe illnesses, or significant disabilities.
- At age 18, beneficiaries can withdraw up to Rs 2.5 lakh entirely or, if the total exceeds this, withdraw 20% with the remaining 80% redirected towards an annuity purchase within the NPS.
Protocols upon Death of a Subscriber:
- Should the subscriber pass away, the entire account balance is transferred to the designated guardian or nominee. If the guardian subsequently passes away, a new guardian is required to complete a fresh KYC to take over the account management.
- In cases where both parents pass away, a legally appointed guardian can manage the funds without additional contributions until the child reaches 18 years of age.
-Source: The Hindu
