The National Pension System or NPS that was designed keeping the need for universal pension in mind is about to undergo a significant change with the rollout of NPS for kids to be rolled out in the next two weeks, reports said. Named as NPS Vatsalya, the NPS will be something like the Public Provident Fund (PPF) which allows one to open an account in the name of a minor with no lower cut off age.
The final touches are being given by the Pension Fund Regulatory & Development Authority (PFRDA) which regulates the operation of the NPS. NPS Vatsalya will offer parents a procedure to plan for the very long-term financial security of their kids after they are born.
NPS for children: Parents/guardians can begin
That such an extension of the NPS is being planned was announced by Finance Minister Nirmala Sitharaman while delivering her budget speech on July 23. According to the indications available so far, the scheme could allow parents to open an NPS account in the name of their children and invest in. The process can continue till they become an adult, when the account would be managed and operated by him/her.
The PPF follows the same model where a parent/legal guardian can open an account and invest a maximum of Rs 1.5 lakh every year on behalf of the minor. The parent can also claim income tax benefits on the investment according to Section 80C of the Income Tax Act 1961.
Now NPS account from 18
According to reports, NPS Vatsalya would offer the same investment options as the traditional NPS, which allows one to select equity and debt instruments from the government and private sectors. NPS subscribers can participate in the active management of their investments or wish to stay inactive.
The traditional NPS allows one to begin investment at the age of 18 and continue till 75, allowing contributions for 57 years. Once NPS Vatsalya is announced, it will perhaps stretch the investment period to more than 70 years – a remarkable length of time in which the force of compounding can create a huge amount of wealth for anyone.
The scheme NPS Vatsalya or NPS for kids was announced by finance minister Nirmala Sitharaman in the budget for FY25. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
