Kolkata: Building a corpus of Rs 1 crore as retirement corpus is considered quite feasible now. However, multiplying that amount by 20 is something absolutely incredible. But believe it or not, the NPS Vatsalya scheme that was inaugurated in September 2024 by finance minister Nirmala Sitharaman is a scheme that can actually allow a parent to pave the way for building such a massive post=retirement amount for his/her son/daughter. With the help of an NPS Vatsalya account, one can start building a pension account even for a kid who is only a few weeks old.
Significantly, the parents/guardians of more than 1 lakh babies have enrolled for the NPS Vatsalya scheme, Pension Fund Regulatory & Development Authority (PFRDA) chairperson Deepak Mohanty said a few weeks ago. NPS Vatsalya scheme encourages accountholders not to withdraw any money from the account even though it is possible for a person to withdraw a certain amount from the account when the accountholder turns 18. There is a very good reason for the experts to discourage withdrawals. Let’s take a closer look.
What is the amount of NPS Vatsalya Rs 5,000 per month
To get an idea of the immense compounding power for NPS Vatsalya scheme, let’s do a small calculation with an online NPS Vatsalya calculator which is available free online. The floor level of minimum wage was Rs 5,340 per month last year. Let’s take this as a monthly investment in NPS Vatsalya and try to calculate the corpus. Suppose a kid is born on January 1, 2025. If the far-sighted parents of this kid opens an NPS Vatslaya account and starts investing this amount every month diligently, the amount of money that will accumulate in the corpus by the time the kid turns 60 will be — hold your breath — Rs 21,39,18,138, or Rs 21.39 crore.
By the way, the corpus when the kid turns 18 will be Rs 32,14,195 or Rs 32.14 lakh. According to the rules, one can withdraw up to Rs 2.5 lakh as a lump sum (with the remainder in a pension plan). This calculation assumes a 10% rate of return on investments.
Documents needed to open NPS Vatsalya account
Is NPS Vatsalya a good investment? — this question is a common poser for many citizens. One of the challenges for this scheme is the very long period over which one has to keep up disciplined investment.
One just needs a few documents of the parents as well as that of the child to open an NPS Vatsalya account. For the parents/guardians, the following docuemnts are needed:
- Guardian’s KYC: Identity and address proof of the parent/guardian such as Aadhaar Card, passport, driving license, voter ID Card, NREGA job card etc
- Guardian’s PAN card
- Minor’s birth Certificate (or passport/school leaving certificate etc). The guardian has to sign too.
- A point to note is that NRI/OCI individuals can also open such an account. The documents they will need are copy of passport, proof of address abroad, proof of bank account.
Paving the path for financial independence for your child can be one of the most significant gifts that parents can leave behind for their kid. NPS Vatsalya is designed precisely keeping that goal in mind — harnessing the power of compounding over the very long term. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
