This new scheme will encourage families to invest in their children's financial security from an early age.
New Delhi: Finance Minister Nirmala Sitharaman announced the launch of a deposit scheme called 'NPS Vatsalya Scheme' in the Union Budget. The scheme is going to be launched within the next two weeks. The scheme is an initiative to secure the financial future of minors. The government and the Pension Fund Regulatory and Development Authority (PFRDA) are finalizing the rules for the scheme, which is expected to give parents a structured way to build long-term wealth for their children. Finance Minister Nirmala Sitharaman announced the scheme in the first full budget of the Modi 0.3 government last month. She will also preside over its official opening of the scheme.
According to the Center, this new scheme will encourage families to invest in their children's financial security from an early age. NPS Vatsalya Scheme is a modified version of the National Pension System (NPS), specially designed for minors. Under this scheme, parents or guardians can open an NPS account for their children and deposit money in it regularly till the child turns 18. The account will be converted directly into a regular NPS account after the child reaches adulthood, allowing the beneficiary to manage their investments and savings independently.
It is known that this NPS Vatsalya Scheme will work in the same way as the normal NPS account works. One can invest in this scheme in the same way as one invests in NPS thinking about their retirement. Investing in NPS can be done through equity in the stock market, government bonds. This results in higher return potential than conventional fixed deposits. When the minor turns 18, they have the option to opt out of the scheme, 80 per cent of the accumulated corpus has to be invested in an annuity plan, the remaining 20 per cent can be withdrawn in lump sum.
New Delhi: Finance Minister Nirmala Sitharaman announced the launch of a deposit scheme called 'NPS Vatsalya Scheme' in the Union Budget. The scheme is going to be launched within the next two weeks. The scheme is an initiative to secure the financial future of minors. The government and the Pension Fund Regulatory and Development Authority (PFRDA) are finalizing the rules for the scheme, which is expected to give parents a structured way to build long-term wealth for their children. Finance Minister Nirmala Sitharaman announced the scheme in the first full budget of the Modi 0.3 government last month. She will also preside over its official opening of the scheme.
According to the Center, this new scheme will encourage families to invest in their children's financial security from an early age. NPS Vatsalya Scheme is a modified version of the National Pension System (NPS), specially designed for minors. Under this scheme, parents or guardians can open an NPS account for their children and deposit money in it regularly till the child turns 18. The account will be converted directly into a regular NPS account after the child reaches adulthood, allowing the beneficiary to manage their investments and savings independently.
It is known that this NPS Vatsalya Scheme will work in the same way as the normal NPS account works. One can invest in this scheme in the same way as one invests in NPS thinking about their retirement. Investing in NPS can be done through equity in the stock market, government bonds. This results in higher return potential than conventional fixed deposits. When the minor turns 18, they have the option to opt out of the scheme, 80 per cent of the accumulated corpus has to be invested in an annuity plan, the remaining 20 per cent can be withdrawn in lump sum.
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