Union Finance Minister Nirmala Sitharaman in July 2024 launched the National Pension System (NPS) Vatsalya Scheme. These are designed to help guardians and parents develop consistent, long-term financial plans for their children. This helps parents invest early and now specifically with retirement in mind what their children will need in the future .
NPS Vatsalya Overview
- Can be opened by any Indian citizen, including NRIs on behalf of a minor (child less than 18 years).
- Minimum of ?1,000 per year with no maximum cap.
- Provides compounding growth of investments.
- Contribute Min — ? 500 Month to Max ? 6000 Year, Flexible contributions
- Investment options – under Default Choice, Auto choice and then Active Choice.
- Withdrawal can be done in case of any specific needs after three years to the extent of 25% of the total amount saved
- Withdrawal choices consist of lumpsum withdrawal for financial savings taking total INR 2.5 lakhs or much less, 20% withdrawal for INR extra than 2. ×5 lakh and buy of an annuity
- If the account is not closed, it gets automatically converted into a regular NPS Tier I account once the child turns 18 years old.
Month: Current Affairs - October 08, 2024
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