NPS (National Pension Scheme) accounts scheme is a very good option for creating a retirement corpus. Till now NPS (National Pension Scheme) accounts Tier I and Tier II could be opened for persons above 18 years of age. It is possible now to open the accounts for minors.

A National Pension Scheme (NPS) for minors has been launched by Finance Minister, Nirmala Sitharaman on 18th September 2024. It allows parents to contribute a certain amount on behalf of their children towards NPS to secure their future and help them develop a retirement fund. The minimum contribution is Rs.1,000 per year and there is no limit on the maximum contribution. The pension scheme will be managed under the Pension Fund Regulatory and Development Authority (PFRDA).

Eligibility for NPS Vatsalya

• Indian citizens below 18 years.
• Non-resident Indian (NRI) and Overseas Citizenship of India (OCI) individuals below 18 years.
• Parents or guardians of a child can open the account on behalf of the minors.

Opening of NPS Vatsalya Scheme

To open an NPS Vatsalya account, parents or guardians can apply online via the eNPS website or through Points of Presence (POPs) like banks and India Post. A quick summary of the online application process is as follows:

1. Visit the eNPS.nsdl.com website.
2. Click ‘Register Now’ under the ‘NPS Vatsalya (Minors)’ tab.
3. Enter the guardian’s date of birth, PAN, mobile number, and email, then click ‘Begin Registration.’
4. Verify the OTP sent to the guardian’s mobile and email.
5. Once verified, an acknowledgement number will appear; click ‘Continue.’
6. Fill in the minor’s and guardian’s details, upload the required documents, and click ‘Confirm.’
7. Make an initial contribution of ₹1,000.
8. A PRAN will be generated, and the NPS Vatsalya account will be opened in the minor’s name.

Documents for NPS Vatsalya Scheme

• Aadhaar card of the guardian.
• Proof of date of birth for the minor.
• Signature of the guardian.
• Scanned copy of the passport (for NRI subscribers).
• Scanned copy of foreign address proof (for OCI subscribers).
• Scanned copy of bank proof (for NRI or OCI subscribers).

Withdrawal & Exit Rules

Before 18 years

• Eligibility: Parents or guardians can withdraw after 3 years of joining NPS.
• Amount: Up to 25% of the contributed amount can be withdrawn.
• Limit: The withdrawal option is available only 3 times till the child turns 18.
• Purposes: Withdrawals can be made for education, disability over 75%, or treatment of specified illnesses, as outlined by PFRDA.

Once the child turns 18 years, the NPS Vatsalya Scheme can be converted into a regular NPS account that the child can manage independently.

After 18 years

KYC Updation: The minor must complete a fresh KYC within 3 months of reaching 18.
Upon exiting the NPS Vatsalya account, the withdrawal conditions are:

• At least 80% of the accumulated corpus must be reinvested in an annuity plan.
• The remaining 20% can be withdrawn as a lump sum.
• If the total corpus is less than Rs. 2.5 lakh, the entire amount can be withdrawn as a lump sum.

In case of unfortunate death, NPS Vatsalya Scheme rules are as follows:

• Death of the minor subscriber: The entire corpus is returned to the guardian (nominee).
• Death of the guardian: A new guardian must be registered through fresh KYC.
• Death of both parents: The legally appointed guardian can continue the account with or without making contributions to the account, and upon attainment of 18 years of age, the subscriber has the option to continue or exit from the scheme.