Kolkata: It might feel a little awkward to discuss post-retirement financials of a child/infant, but NPS Vatsalya is designed precisely for that end — building a safe kitty for financial independence after active earning life for a child. Any parent or legal guardian of a child can lay the foundation of a kitty of several crores of rupees when a child turns 60, by beginning to invest a small amount per month now. The scheme has been designed for promoting investment for the very long term and investment experts, as well as the government, discourage early withdrawal.
But financial emergencies don’t wait for anyone’s approval and one might need to take out money from NPS Vatsalya. Is one allowed to do so? If yes, how much can one withdraw at the most and how does one do it? Let’s have a look.
Can NPS Vatsalya be withdrawn early?
Those who designed NPS Vatsalya have kept provisions for early withdrawal of investments in the scheme. Partial withdrawal before the child turns 18 is permitted, but only under the following conditions:
Education of the minor subscriber
Medical treatment of the minor subscriber
Disability of more than 75% of the minor subscriber
There is a cap on the amount that can be withdrawn early — it is 25% of the contributions made and does not include the returns generated on the investments. Moreover, one can make partial withdrawals a maximum number of three times till the minor turns 18. There is another stipulation — a partial withdrawal can be made only after a period of three years from the beginning of investment in the scheme.
Bank account necessary for withdrawal
One thing to be kept in mind is that the bank account of a minor is not necessary to open an NPS Vatsalya account but the bank account details are needed when one makes a partial withdrawal before the minor turns 18. The money will be credited to this account when a partial withdrawal is admitted. Another point is , the subscriber must do the KYC afresh within 3 months of turning 18 and thereby the NPS Vatsalya account will be convereted into a regular normal NPS account.
Many ask, “Is NPS Vatsalya good or bad?” The simple asnwer, it can uncork magic if someone believes in disciplined long-term investing and parents can consult financial strategists to start investing when their loved one is really young — say, less than a year.
NPS Vatsalya, the extension of the NPS designed to build a post-retirement corpus for a kid, harnesses the immense compounding power over 50-60 years and financial planners usually discourage one from taking out money from the scheme. But there are provisions for early withdrawal from this scheme as well. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
