New pension scheme for minors: Should you invest in NPS Vatsalya? | Mint

NPS Vatsalya is a National Pension System (NPS) contributory new pension scheme for minors. Its goal is to empower kids by establishing the retirement savings habit at a young age.

By allowing parents to deposit a minimum of ₹1,000 per month with no upper limit, the NPS Vatsalya scheme helps children develop disciplined saving habits. Until the child is 18, the plan is intended to be run by the parents; the account will be in the child’s name. When the account reaches adulthood, it can be easily changed to a standard NPS account or another non-NPS plan.

Should you invest in NPS Vatsalya?

The launch of NPS Vatsalya is a huge step toward democratising pension planning in India, especially among the younger generation. “In our market survey, we have seen that as Indians invest across a growing number of instruments, retirement planning, though structured, seems to be neglected. This contributory immersion pension plan, which pertains to the proven NPS architecture, appears to provide such a solution with its offering of equity and debt investments accompanied by tax benefits. The scheme is appealing as it can help in the creation of wealth over the long term, through returns that are linked to the market, with the routine practice of making contributions being beneficial for parents in ensuring a good retirement for their children,” said Siddharth Maurya, Founder & Managing Director of Vibhavangal Anukulakara Private Limited

Given the present environment and increasing life expectancy in India, he added that it would make practical sense to begin early retirement planning with NPS Vatsalaya since there appears to be plenty of headroom for body formation and compound growth benefits.

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Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.