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The NPS Vatsalya scheme is a variant of the existing National Pension System (NPS), specifically tailored for young individuals. This innovative programme allows parents or guardians to open accounts for their minor children and make contributions towards their retirement savings. read more
 "Plan to invest for your child's future? Budget 2024 has a new scheme - NPS Vatsalya")
The NPS Vatsalya is a plan for contribution by parents and guardians for minors. Pixabay
In her Budget 2024 speech, Finance Minister Nirmala Sitharaman unveiled the National Pension Scheme (NPS) Vatsalya, an initiative designed to promote long-term savings for minors. “NPS Vatsalya, a plan for contribution by parents and guardians for minors, will commence,” she announced.
What is the NPS Vatsalya
The NPS Vatsalya scheme is a variant of the existing NPS, specifically tailored for young individuals. This innovative programme allows parents or guardians to open accounts for their minor children and make contributions towards their retirement savings.
“NPS-Vatsalya, a plan for contribution by parents and guardians for minors will be started. On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account,” stated Finance Minister Sitharaman.
A notable feature of the scheme is its flexibility. Once the minor turns 18, parents have the option to convert the account into a regular NPS account, ensuring a smooth transition into long-term retirement planning.
What is NPS?
The National Pension System is a government-run investment scheme aimed at providing retirement income to its subscribers. It allows individuals to allocate their funds across various asset classes, accommodating different risk appetites and investment goals.
The NPS offers two types of accounts: Tier 1 and Tier 2.
Tier 1 is a pension account primarily focused on retirement savings, while Tier 2 serves as a voluntary savings account. Both accounts are regulated by the Pension Fund Regulatory and Development Authority (PFRDA), ensuring secure investment options for subscribers.
This change in the NPS contribution deduction is anticipated to encourage greater participation from both employees and employers, thereby promoting long-term financial security for the workforce.
With inputs from agencies
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