Finance Minister Nirmala Sitharaman is set to launch the NPS Vatsalya scheme on September 18, 2024, as part of the announcements made in the Union Budget 2024-25. According to a statement from the Finance Ministry on Monday, schoolchildren will also participate in the launch event, underscoring the scheme’s focus on securing the financial future of minors.
During the event, the Finance Minister will unveil an online platform for subscribing to NPS Vatsalya, release the scheme’s brochure, and distribute Permanent Retirement Account Number (PRAN) cards to new minor subscribers. The program will be held simultaneously at 75 locations across the country.
What is NPS Vatsalya?
NPS Vatsalya, an initiative of the Modi government, is designed to safeguard the financial future of children by allowing parents and guardians to contribute to a pension scheme on behalf of their minor children. As outlined in the Union Budget, this scheme can be easily converted into a regular National Pension System (NPS) account when the child reaches adulthood. With a minimum annual contribution of ₹1,000, parents can invest in the name of their child, promoting long-term financial security.
Benefits of NPS Vatsalya
The NPS Vatsalya scheme offers several advantages, making it a valuable tool for parents to ensure their children’s financial well-being:
- Early Investment Growth: Investing at a young age allows for significant growth over time due to the power of compound interest.
- Retirement Fund: By the time the child reaches retirement age, they will have accumulated a substantial fund.
- Promotes Savings Habits: The scheme helps inculcate savings habits in children from an early age and encourages long-term financial planning.
- Easy Transition to Regular NPS Account: Once the child turns 18, the account can be converted seamlessly into a regular NPS account.
- Tax Benefits: Contributions made under NPS Vatsalya may qualify for tax deductions, and a portion of the corpus can be withdrawn tax-free upon retirement.
This scheme, under the oversight of the Pension Fund Regulatory and Development Authority (PFRDA), aims to provide financial security and instill responsible saving habits in children from an early age.
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