NPS Vatsalya completes two years: 4.9 lakh accounts opened, AUM reaches ₹403 crore

NPS Vatsalya, the pension-linked savings scheme designed for minors, has completed two years since its launch, with 4.9 lakh enrolments and assets under management (AUM) of ₹403 crore, according to the Pension Fund Regulatory and Development Authority (PFRDA).

The scheme was announced in the Union Budget 2024-25 and launched on September 18, 2024. It allows parents or legal guardians to open and operate an account for a minor, while the child remains the subscriber and sole beneficiary.

NPS Vatsalya is available to Indian citizens, NRIs and OCIs below 18 years of age. A parent or legal guardian operates the account until the child reaches adulthood.

The scheme allows contributions to be invested in market-linked instruments through pension funds registered with PFRDA. Relatives and friends can also make gift contributions to a child's account.

PFRDA has been conducting school programmes, townhalls and financial-awareness initiatives to increase awareness among children, parents, teachers and other stakeholders.

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NPS Vatsalya minimum contribution

The scheme's framework was revised through the NPS Vatsalya Scheme Guidelines, 2025, issued on January 7, 2025, and effective from February 23, 2025.

Under the revised framework, the minimum contribution was reduced to ₹250, while there is no upper limit on contributions.

The changes also expanded investment flexibility, allowing pension funds to design asset-allocation strategies with equity exposure of up to 100%, subject to the applicable regulatory framework.

NPS Vatsalya withdrawal rules

Partial withdrawals are allowed after the account has completed three years, subject to specified conditions and limits. Withdrawals can be made for permitted purposes such as education, treatment of specified illnesses and disability-related requirements.

The revised framework increased the permitted number of partial withdrawals from two to four during the minor's period under the scheme.

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What happens when the child turns 18?

After turning 18, the child can choose to continue with NPS Vatsalya until the age of 21, shift the account to NPS Tier-I, or exit the scheme, subject to applicable rules.

The account is held in the child's name, making the minor the sole beneficiary. The required KYC and other formalities have to be completed when the child reaches adulthood.

If no option is exercised between the ages of 18 and 21, the account is automatically shifted to a higher-equity scheme under the Multiple Schemes Framework of the same pension fund.

NPS Vatsalya tax benefits

NPS Vatsalya also provides tax benefits available under the NPS framework, subject to prevailing income-tax rules and applicable conditions.

PFRDA said its focus in the third year of the scheme will be on expanding its reach to more children and families and increasing awareness about long-term retirement-oriented savings.

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