NPS Vatsalya calculator: How much will you get after 60 years if you start saving Rs 1,000 per year

NPS Vatsalya scheme: To build a substantial post-retirement fund for your child, it is advisable to start early. Recently launched in September of this year by Finance Minister Nirmala Sitharaman, the National Pension System (NPS)-Vatsalya offers a viable solution for parents looking to secure their child's future financially.

The NPS Vatsalya scheme, introduced in the Union Budget 2024-25, is specifically tailored for minors and provides flexible contribution and investment choices for parents or legal guardians. This savings-cum-pension scheme will be overseen by the Pension Fund Regulatory Authority of India (PFRDA).

Parents can begin investing in the NPS Vatsalya scheme with a minimum monthly contribution of Rs 1,000, without any upper limit. They will manage the account until the child reaches 18 years of age, at which point ownership of the account will transfer to the child. The account can then be smoothly converted into a standard NPS account or another non-NPS scheme. The NPS Vatsalya scheme also allows for flexible contributions to the account by giving guardians the choice to select from a variety of pension funds for managing investments.

The NPS Vatsalya Scheme allows Indian citizens to make deposits for their children, which can be withdrawn by the child upon turning 18 years old.

The scheme requires a minimum deposit of Rs 1,000, with an initial opening amount of Rs 1,000. There is no maximum limit on the amount that can be deposited. The interest rate for the scheme has recently ranged between 9.5% to 10%.

NPS Vatsalya Calculator

The NPS Vatsalya scheme is receiving recognition for its appealing advantages. By investing just Rs 275 per month, or Rs 3,300 annually, individuals have the opportunity to accumulate a significant fund of Rs 1 crore when their child reaches 60 years old and retires.

Long-Term Investment Growth:

> Monthly Investment: Rs 275 or Annual Investment: Rs 3,300
> Investment Duration: 60 years
> Rate of Return on investment: 10%
> Total Investment Over 60 Years: Rs 1,98,000

Projected Returns:

> By maintaining a disciplined investment strategy, the anticipated returns can be quite substantial:
> Total Return on Investment: Rs 98,17,198
> Total Corpus at Retirement (60 years): Rs 1,00,15,198

Real-time value

When looking at Rs 1 crore today, it may appear to be a significant amount, but it's crucial to think about its future worth. With an assumed annual inflation rate of 6% over the next 60 years, the purchasing power of this sum will notably diminish. Let's delve into what the true value of Rs 1 crore will be in six decades. With an annual inflation rate of 6% over the next 60 years, the equivalent value of Rs 1 crore would be roughly Rs 9.18 lakh in current terms.

NPS Vatsalya Scheme Formula

The formula to calculate a maturity amount under the NPS Vatsalya Scheme  is A = P (1 + r/n) ^ nt, where:

A: is the amount
P: is the principal sum
r: is the rate of interest
n: is the number of times interest compounds
t: is the number of years

Investment Choices

Parents have three types of accounts or investment options to choose from:

Default Choice: Opt for the Moderate Life Cycle Fund - LC-50 (with 50% equity).
Auto Choice: Parents can select from Lifecycle Fund options such as Aggressive - LC-75 (with 75% equity), Moderate LC-50 (with 50% equity), or Conservative LC-25 (with 25% equity).
Active Choice: Parents have the flexibility to actively allocate funds across Equity (up to 75%), Corporate Debt (up to 100%), Government Securities (up to 100%), and Alternate Asset (up to 5%).