NPS Vatsalya: How can you open this pension account meant for minors? An explainer

If you are looking for an investment opportunity for your children, one of the investment options you could explore is NPS Vatsalya, a scheme meant for children under the age of 18.

It is opened and operated by the guardian on behalf of the minor. It provides the child with a head start on saving for retirement and gives valuable financial lessons at an early age. It inculcated the importance of financial planning and discipline, which can benefit the child throughout their life.

NPS Vatsalya can be opened through points of presence (POPs) registered with PFRDA either online or in physical mode, directly or through Retirement Advisors/Pension Agents, or the online platform (eNPS) of NPS Trust.

Documents required

These are the documents which are acceptable: birth certificate of the minor, school leaving certificate/ matriculations issued by higher secondary board of respective states, passport of minor and PAN.

How is the account operated?

The NPS Vatsalya account is opened by the natural or legal guardian in the name of the minor who is the sole beneficiary of the account. A unique permanent retirement account number is issued in the minor's name. The account is operated by the guardian on behalf of the minor until they reach 18.

The minimum contribution is ₹1,000 per annum with no upper limit on the maximum contribution.

KYC norms

The KYC (Know Your Customer) norms applicable to the guardian are in accordance with the standards given by PFRDA. When there is a court-appointed legal guardian, a copy of the court order regarding the appointment of the legal guardian must be submitted along with the KYC documents.

Bank account

It is not mandatory for the minor to have a bank account or a joint bank account with the minor before opening the NPS Vatsalya account. But it will be required at the time of partial withdrawal or exit before the age of 18.

When the minor attains majority, the NPS Vatsalya account is transitioned into NPS Tier I account. However, a fresh KYC of the subscriber should be carried out within three months of reaching majority. Therefore, contributions to the NPS Tier1 Account will be permitted only after fresh KYC is submitted.

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