Bhubaneswar: Finance Minister Nirmala Sitharaman has introduced the NPS Vatsalya scheme, an initiative aimed at fostering long-term savings for minors. Announced during the Budget 2024 speech, “NPS Vatsalya, a plan for contribution by parents and guardians for minors will start,” she said.
The NPS Vatsalya scheme is designed as a variant of the existing National Pension System (NPS), tailored specifically to cater to younger individuals. Under this innovative program, parents or guardians can open accounts for their minor children and make contributions towards their retirement savings.
“On attaining the age of majority, the plan can be converted seamlessly into a non-NPS plan,” said FM Nirmala Sitharaman.
One of the key features of the scheme is its flexibility. Once the minor reaches 18 year of age, parents have the option to convert the account into a regular NPS account, ensuring a seamless transition into long-term retirement planning.
“The unique thing about the scheme is that it is designed in such a way that it can be converted into a non-NPS plan once the child attains the majority. we look forward to its upcoming progression in supporting parents and securing the future of the younger generation,” a chartered accountant said.
“Early schemes for planning social security and pension benefits of the next generation is a welcome step. It would be important that necessary checks and balances are put in place to ensure that parents’ savings do not get out of their control immediately on a child becoming a major,” he said.
Experts also believe that the introduction of NPS Vatsalya is seen as a significant step towards encouraging early savings and investment habits among Indian families. By allowing parents to start retirement planning for their children at an early stage, the scheme aims to create a more financially secure future for the younger generation.
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