Finance Minister Nirmala Sitharaman on Wednesday launched the NPS Vatsalya scheme, which will allow parents to save for their children's future by investing in a pension account.
Parents can subscribe to NPS Vatsalya online or by visiting a bank or post office. The minimum contribution to open Vatsalya account is Rs 1,000. Subscribers will have to contribute Rs 1,000 annually thereafter.
The guidelines for withdrawal from NPS accounts are being finalised.
Launching the scheme, Sitharaman said NPS has generated very competitive returns and offers the option to people to save while ensuring future income.
NPS Vatsalya is an extension of the already existing NPS for children. In the last 10 years, NPS has 1.86 crore subscribers with an Asset Under Management (AUM) of Rs 13 lakh crore.
Children below the age of 18 years can open an NPS Vatsalya account, which will automatically get converted to a regular NPS account upon completion of 18 years of age. Pension will come from the account only upon attainment of 60 years of age.
NPS has generated 14 per cent, 9.1 per cent, and 8.8 per cent returns for investments in equity, corporate debt and G-Secs, respectively, Sitharaman said.
NPS Vatsalya was announced in the FY25 Budget presented in July.
Many lenders, including ICICI Bank and Axis Bank, have joined hands with the PFRDA to launch National Pension Scheme (NPS) - Vatsalya.
ICICI Bank inaugurated the scheme's commencement in Mumbai at its service centre by registering a few children's accounts under NPS Vatsalya.
Financial Services Secretary Nagaraju Maddirala said the government will be receptive to subscriber feedback and improve the pension scheme accordingly.
"Ever since we have announced the proposed launch of the PM Vatsalya scheme, we have been getting feedback and suggestions to improve the scheme. As we go along and implement the Vatsalya scheme, we will try to improve so that concerns expressed in the last week are taken care of," Maddirala said.
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