NPS Vatsalya was born from the womb of the National Pension System, or NPS. In a sense it is the most potent expansion of the voluntary contribution based pension scheme in the country which is open to all Indians. It empowers parents to build a huge corpus of money for their children.
Significantly, NPS Vatsalya allows a child to withdraw a part of the sum accumulated in the account when he/she turns 18 – becomes an adult – but common sense dictates that the account is best left to compound over the years till the accountholder turns 60. Let’s find out how much will accumulate in an NPS Vatsalya account if it is continued from the first year to the 60th year of an individual, which is usually the retirement age of an individual. However, this calculation won’t depend on whether the accountholder works for a living or doesn’t.
NPS Vatsalya scheme: giant compounding power
Let’s now turn to the NPS Vatsalya calculator through some simple steps to find out its potential. One needs to type in a few fundamental figures. Let’s assume the following:
Date of birth of the child: January 1, 2025
Contribution type: Monthly
Monthly contribution: Rs 1,500 (@ Rs 50 a day)
Annual increase in contribution: 5%
Return on investment: 10%
Now you should press ‘Calculate’ and the following results will appear on your screen:
Total investment: Rs 5,06,383
Corpus at age 18: Rs 12,48,706
Corpus at age 60: Rs 27,23,75,802 (or Rs 27.23 crore)
The point to note here is that when the child turns 18, he/she can withdraw up to Rs 2.5 lakh as a lump sum amount and the rest in the form of a pension plan.
NPS Vatsalya calculation without the rise in contribution
If you think that the annual increase of 5% in the monthly contribution will entail a lot of money after a few years, let’s see the calculation if you simply keep on putting Rs 1,500 every month for 60 years. In that case this small investment is maintained, at the age of 60, the corpus will stand at Rs 6,00,89,365 – or Rs 6 crores.
NPS Vatsalya has humongous compounding power. This power is so incredible and works so imperceptibly that a nominal investment per day can build a huge corpus of money for your kid. Read on to see detailed calculation. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
