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NPS Latest Updates: In the budget, the government has allowed opening NPS accounts in the name of children as well. This scheme has been named NPS Vatsalya. Its purpose is to provide a stable financial future to children when they become adults or for a long time. Under this, parents and guardians can invest directly in NPS in the name of their minor children. This scheme can prove to be good for those who want to save for the future of their children and want to give them financial security after retirement.
what is the plan
This is a variant of the existing NPS, designed specifically for young individuals. Under this scheme, parents and guardians can open an NPS account for their children and contribute a fixed amount every month or year until the child turns 18. This will make it possible for parents or guardians to plan career and pension for their children.
Only one account can be opened in the name of one child
Till now, the mandatory age to open National Pension Scheme (NPS) was 18 to 70 years. But now people below 18 years of age can open an account in NPS Vatsalya Yojana. Only one account can be opened for a child. Parents or guardians will operate it until the child turns 18.
These options will be available when the child attains adulthood
On completion of 18 years, the Vatsalya account will be transferred to the concerned adult. That is, he will be able to operate it himself. After this, if he wants, he can convert it into a normal NPS account and continue it till the age of 75. Or he can convert it into a non-NPS account. That is, the amount of the fund can be invested in any other scheme.
Invest according to your choice
Parents can deposit a minimum of Rs 500 per month or a maximum of Rs 1.50 lakh per year in the child's NPS account. The child can withdraw the entire amount from his NPS Vatsalya account on attaining the age of 18 years. Or can get pension on attaining the age of 60 years.
The longer the investment, the better the returns
According to experts, if a parent invests Rs 5,000 every month in this account, it will be Rs 60,000 annually. When the child turns 18, this investment will become Rs 10.80 lakh. Now if 10 percent annual return is considered, the profit will be Rs 19.47 lakh. In this way, a total fund of Rs 30.27 lakh can be deposited.
If the adult continues this NPS account, by the age of 60, Rs 36 lakh will be deposited in the account. At a 10% return, the total fund can be Rs 20.50 crore. On retirement, the NPS account can potentially yield Rs 12 crore. According to the current rules, an annuity plan with a pension of Rs 8 crore has to be purchased. It is certain that this amount will ensure a good monthly pension.
How to open an account
NPS is a long-term investment scheme, which is managed by the pension fund regulator PFRDA. The process of opening an NPS account is straightforward. You can open this account on the website of pension fund regulator eNPS. All public and private banks also offer this facility.
That is why this plan is beneficial
1. NPS Vatsalya account can be converted into normal NPS account on completion of 18 years.
2. The entire amount can also be withdrawn without converting it into a normal NPS account.
3. This scheme provides portability, i.e. the account will not change even if you change jobs.
4. If the account is kept open for a long period, a large amount will be accumulated.
5. At the time of retirement one can withdraw 60% of the amount standing to the credit in the account.
6. A part of the fund can be withdrawn without tax at the time of retirement.
