The scheme was announced in the Union Budget 2024-25 and launched on September 18, 2024. It allows parents or legal guardians to open and operate an account on behalf of a minor, with the child being the subscriber and sole beneficiary.
PFRDA has expanded outreach for the scheme through school engagements, townhalls and financial awareness programmes aimed at children, parents, teachers and other stakeholders, it said.
The framework was revised earlier this year through the NPS Vatsalya Scheme Guidelines 2025, issued on January 7 and effective from February 23. The revised guidelines lowered the minimum contribution to ₹250, with no upper limit on contributions.
The changes also increased the number of permitted partial withdrawals from two to four and expanded investment flexibility, with pension funds allowed to design asset allocations with equity exposure of up to 100%, subject to the applicable framework.
Partial withdrawals are permitted after completion of three years, subject to prescribed conditions and limits, including for specified education, treatment and disability-related purposes.
Once the minor turns 18, the account can be continued under NPS Vatsalya up to the age of 21, shifted to NPS Tier-I or exited subject to the applicable rules. If no option is exercised between 18 and 21, the account is automatically shifted to a higher-equity scheme under the Multiple Schemes Framework of the same pension fund.
NPS Vatsalya is open to Indian citizens, including NRI and OCI minors. Contributions are invested in market-linked instruments, and the guardian can choose from pension funds registered with PFRDA.
The scheme also allows relatives and friends to make gift contributions towards a child’s account. It provides tax benefits available under the NPS framework, subject to applicable tax rules.
PFRDA said the focus in the scheme’s third year will be on expanding its reach among more children and families.
