NPS Vatsalya scheme announced in the Union Budget as a new pension plan for minors.
A minimum amount of ₹1,000 is needed to open accounts for minors under the scheme
And at least ₹1,000 must be contributed every year till the child turns 18 years of age, after which the account gets converted into a normal National Pension System (NPS) account.
Pension will come from the account only after they turn 60.
It is regulated and administered by the Pension Fund Regulatory and Development Authority (PFRDA)
Scheme can be opened through various Points of presence such as major banks, India Post, Pension Funds and Online platform (e-NPS)
Permanent Retirement Account Number (PRAN) cards will be issued to newly registered minor subscribers
Both the child and the parent must be Indian citizens. All parties must comply with the Know Your Customer (KYC) requirements
After three years of opening the NPS vastsalya account, partial withdrawals are allowed.
Up to 25% of the corpus can be withdrawn for specific purposes, including education, medical treatment for certain illnesses, or disabilities over 75%.
Once the child attains the age of 18, the corpus of up to Rs 2.5 lakh can be withdrawn entirely and if it exceeds, the 20% can be withdrawn and the rest 80% can be used for annuity purchase in the NPS.
In the unfortunate event of a subscriber's death, the entire corpus is given to the nominee, usually the guardian.
If the guardian dies, a new guardian must be assigned after completing a new KYC.
If both parents die, a legal guardian can manage the account without further contributions until the child turns 18.
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