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NPS Vatsalya Scheme

NPS Vatsalya: Scheme for Minors, Eligibility, Benefits and Rules

NPS Vatsalya is a voluntary contributory savings and long-term financial security scheme designed exclusively for minors. A parent or legal guardian opens and operates the account in the name of the minor. The scheme is covered under the National Pension System (NPS) and regulated by the Pension Fund Regulatory and Development Authority (PFRDA).


An account can be opened for an Indian citizen below 18 years of age, including eligible NRIs and OCIs. The minimum contribution is ₹250 at opening and ₹250 in each financial year, with no maximum contribution limit. Contributions are invested by a PFRDA-registered Pension Fund, and returns are market-linked.
 

NPS Vatsalya at a Glance

Feature

Details

Eligibility

Indian citizen below 18 years, including eligible NRIs and OCIs

Account holder

Minor is the subscriber; parent or legal guardian operates the account until the subscriber attains majority (18 years) 

Beneficiary

Minor subscriber

Minimum contribution

₹250/- at the rime of registration/opening and ₹250/- in each financial year

Maximum contribution

No maximum limit

Returns

Market-linked 

Partial withdrawal

Up to 25% of own contributions, excluding returns, for specified purposes

At 18

Continue up to 21 years or shift entire corpus to NPS, or exit, subject to applicable rules

  

What is NPS Vatsalya?

NPS Vatsalya was announced in the Union Budget 2024-25 and launched on 18 September 2024 by the Government of India. It is covered under the National Pension System under sections 12(1)(a) and 20 of the Pension Fund Regulatory and Development Authority Act, 2013. The scheme is governed by the NPS Vatsalya Scheme Guidelines 2025 and amendments thereto. The scheme promotes early saving, financial literacy, financial planning and long-term financial security for minors.
The minor is the subscriber and sole beneficiary. A Permanent Retirement Account Number (PRAN) is issued in the name of the minor, while the parent or legal guardian operates the account until the minor attains 18 years.

Who is eligible for NPS Vatsalya?

An NPS Vatsalya account may be opened for an eligible Indian citizen below 18 years of age, including eligible Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). The scheme is gender-neutral and available to all eligible minors, irrespective of gender. The account is opened and operated by the parent or legal guardian exclusively for the benefit and financial future of the minor.

 Key Benefits of NPS Vatsalya

Transparent: The account can be accessed online, and applicable disclosures by intermediaries and Pension Funds support transparency.
Market-linked returns: NPS Vatsalya provides market-linked returns based on the performance of the selected Pension Fund; returns are not guaranteed.
Tax efficient: Eligible tax benefits are available under the Income-tax Act, 2025.
Empower your child: Early exposure to saving and financial planning helps build responsible financial behaviour for life.
Financial discipline: Small, regular investments help build a strong habit of saving and planning.
Power of compounding along with financial security: Starting early allows money to grow significantly over time through compounding, creating a financial cushion for the future.

Documents Required for NPS Vatsalya

For

Documents / requirement

Minor

For Proof of date of birth:  birth certificate, school leaving certificate, matriculation certificate, PAN or passport, as applicable

Parent / legal guardian

KYC document such as Aadhaar, Driving Licence, Passport, Voter ID, NREGA Job Card or National Population Register document, along with PAN or Form 60

Bank account

Optional for resident Indians at opening; mandatory for NRIs/OCIs. Required as applicable for withdrawal/exit.

NPS Vatsalya Contribution

The minimum contribution is ₹250/- at account opening, ₹10/- for subsequent contributions, and minimum ₹250/- in each financial year. There is no maximum contribution limit. There is no restriction on the number of contributions in a financial year. Parents, guardians, relatives, and friends may contribute through registered PoPs, online facilities (mobile app/website) offered by PoPs, eNPS, UPI Apps, and other electronic modes approved by PFRDA from time to time.
The account does not automatically cease merely because a contribution is not made in a particular financial year. It continues to be governed by the applicable NPS Vatsalya rules and operational requirements.

NPS Vatsalya Investment and Returns

The guardian can choose a Pension Fund registered with PFRDA. Contributions are invested by the selected Pension Fund in accordance with the applicable PFRDA investment framework.
Pension Funds may design their own asset allocation for NPS Vatsalya, allocating up to 100% to Equity, similar to Multiple Scheme Framework (MSF) schemes, or alternatively may follow an indicative pattern with limits of 75% for equity, 20% for government securities, 30% for debt instruments and 10% for money market instruments.
 

Interest Rate/Returns
NPS Vatsalya does not provide a fixed or guaranteed interest rate. Returns are market-linked and can vary with the performance of the selected Pension Fund and investment approach.


 NPS Vatsalya Charges

Charges are the same as under the NPS All Citizen Model, as prescribed by PFRDA from time to time.

 NPS Vatsalya Partial Withdrawal Rules

Condition

Provision

Permitted purposes

Education of the minor subscriber, treatment of specified illnesses, and disability of more than 75% of the minor subscriber

Lock-in

Minimum 3 years from account opening

Maximum withdrawal

Up to 25% of the minor subscriber's own contributions, excluding returns

Number of Partial Withdrawals

Before 18 - Maximum two withdrawals 
Between 18 to 21 - Two additional withdrawals, subject to KYC requirements

  

What happens to NPS Vatsalya when the Child turns 18?

On attaining 18 years, the subscriber must complete fresh KYC and furnish the required nominee details. Management of the account then passes to the subscriber.

Option

Provision

Continue in NPS Vatsalya

Continue in the scheme up to 21 years.

Shift to NPS

Shift the entire accumulated corpus to NPS under the All Citizen Model or another applicable model, after required KYC.

Exit

If corpus is below ₹8 lakh, the entire corpus can be withdrawn in lump sum. 
If corpus is ₹8 lakh or more, up to 80% can be withdrawn as lump sum and at least 20% is to be utilised for purchase of annuity.

 

What happens if no option is exercised by age 21?

If no option is exercised between the age 18 and 21, the account is automatically shifted to a higher-equity scheme under the Multiple Schemes Framework of the same Pension Fund. Thereafter, the account is governed by the PFRDA (Exits and Withdrawals under the NPS) Regulations, 2015.

 NPS Vatsalya tax benefits

Stage

Old Tax Regime

New Tax Regime

Contribution

Deduction up to ₹50,000 for eligible contribution by the parent/guardian under Section 124(4) of the Income-tax Act, 2025 (corresponding to Section 80CCD(1B) of the Income-tax Act, 1961).

No deduction is available for this contribution.

Partial Withdrawal

Partial withdrawal up to 25% of own contributions is exempt under applicable provision in Schedule III of the Income-tax Act, 2025 (corresponding to Section 10(12BA) of the Income-tax Act, 1961).

Same exemption as applicable under the old tax regime.

Exit / Closure

Lump-sum withdrawal up to 60% of the corpus is tax-exempt under Schedule II (Table: S. No. 6) of the Income-tax Act, 2025. 
Amount used for purchase of annuity is exempt at purchase under Section 124(9).
 

Same exemption as applicable under the old tax regime.

Death of minor

Amount received by the parent, guardian or nominee, as applicable, is not treated as their income.

Same exemption as applicable under the old tax regime.

  

Other important questions

Can NPS Vatsalya and Sukanya Samriddhi Yojana be held together?
Yes. An NPS Vatsalya account may be opened irrespective of whether the child has a Sukanya Samriddhi Yojana account, scholarships or other benefits from the Central or State Government, subject to the respective scheme rules.
Can a parent without an NPS account open an NPS Vatsalya account?
Yes. A parent or legal guardian does not need to have an existing NPS account or be a government employee.
Can a parent with an NPS account open an NPS Vatsalya account?
Yes. A parent or legal guardian having an existing NPS account can open an NPS Vatsalya account for their children.
Can grandparents open or contribute to the NPS Vatsalya scheme?
A grandparent may open the account only if the grandparent is the legal guardian. However, Grandparents and Relatives and friends, may gift contributions to the NPS Vatsalya account of the minor.
What happens if the subscriber dies?
The entire accumulated pension wealth is payable to the guardian, nominee(s) or legal heir(s), as applicable. The recipient may also have the option to transfer the proceeds to an NPS account, subject to applicable provisions.
What happens if the guardian dies?
A new guardian must be registered by submitting the necessary KYC documents. If both parents predecease the subscriber, a legally appointed guardian may continue the account with or without further contributions, subject to applicable provisions.

Grievance redressal

Grievances may be lodged at Pension Sahayak, PFRDA's AI-powered integrated grievance portal. Intermediaries must resolve a grievance within 30 days of receipt. Unresolved grievances may be escalated through the prescribed hierarchy: intermediary, NPS Trust, Ombudsman, PFRDA and the Securities Appellate Tribunal.

 Frequently Asked Questions about NPS Vatsalya

How can I open an NPS Vatsalya account online?
An account can be opened through the eNPS platform or online facilities provided by registered Points of Presence.
What is the NPS Vatsalya age limit?
The account is for an eligible minor below 18 years of age. An existing subscriber may continue under the applicable provisions up to 21 years.
How many NPS Vatsalya accounts can be opened for one child?
A single NPS Vatsalya account may be opened for a minor, subject to applicable scheme and operational provisions.
What is PRAN in NPS Vatsalya?
PRAN means Permanent Retirement Account Number. It is issued in the name of the minor subscriber and identifies the NPS account.
Can the Pension Fund be changed?
Yes, once in a financial year.
Who regulates NPS Vatsalya?
NPS Vatsalya is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

Disclaimer: This content is for general information only. Users are advised to refer to the applicable Regulations, Guidelines, Circulars and Instructions issued by PFRDA from time to time for official and up-to-date information. Tax treatment is subject to the applicable income-tax law and amendments thereto.
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