11:30 AM IST – The Pension Fund Regulatory and Development Authority has released the NPS Vatsalya Scheme Guidelines 2025, and PIB has released the news. Now, finally, giving parents clear and simple rules to save money for their children’s future under the National Pension System.
NPS Vatsalya is made only for children below 18 years. The idea is very simple. Just start saving early, give time to money to grow, and help children build long-term financial security. The scheme was first announced in the Union Budget 2024–25 and later launched on September 18, 2024, by Finance Minister Nirmala Sitharaman. At that time, many parents had questions. Now, with the 2025 guidelines in place, the rules are clear, and parents can easily understand how this scheme works in real life.
Who can open NPS Vatsalya?
Any Indian child below 18 years can join this scheme. This also includes NRI and OCI children. The account is opened in the child’s name, and the parent or legal guardian looks after it. Parents only manage the account, but the money belongs fully to the child and is meant only for the child’s future.
How much money is required?
This is where NPS Vatsalya feels friendly towards normal families.
- Minimum amount to open account: ₹250
- Minimum yearly contribution: ₹250
There is no upper limit. Parents can invest more whenever they want. Even grandparents, relatives, or friends can add money as a gift to the child’s account.
Quick example – Ramesh Yadav, a daily wage worker from Azamgarh, Uttar Pradesh. he saves ₹400 every month in an NPS Vatsalya account for his son. In 20 years, his total investment comes to around ₹96,000. At an average return of about 9%, this small monthly saving can grow to nearly ₹3 lakh. Ramesh says earlier he thought small amounts were useless, but now he understands the power of time. “I cannot save big money, but I can save little every month,” he says. For families like his, NPS Vatsalya turns small savings into a meaningful future fund.
Where is the money invested?
Parents can choose any pension fund registered with PFRDA. The money is invested in a mix of equity (shares), government bonds, and debt instruments. Equity investment can go up to 75%, which helps money grow faster over long periods. Since the child has many years ahead, this long-term approach works in their favour.
Can money be withdrawn before 18?
Yes, but only when really needed. Partial withdrawal is allowed after 3 years of opening the account.
- Maximum withdrawal: 25% of total contribution (profit not included)
- Allowed for:
- Child’s education
- Medical treatment
- Serious disability
- Only two withdrawals are allowed before the child turns 18
This rule keeps savings safe while still helping during emergencies.
What happens when the child turns 18?
Once the child turns 18, fresh KYC is compulsory. After that, the child gets time till 21 years to decide what to do next.
The options are:
- Continue savings by shifting to normal NPS Tier-I
- Withdraw up to 80% money and invest 20% in a pension
- Take the full money if the total savings are ₹8 lakh or less
If no decision is taken by 21, the account automatically moves under regular NPS rules.
Special push for rural areas
To spread awareness, PFRDA has announced incentives of up to ₹100 per account for Anganwadi workers, ASHA workers and Bank Sakhis. This will help families in rural and semi-urban areas understand and join the scheme easily.
Bottom line
Before, NPS Vatsalya sounded good but lacked clarity. The 2025 guidelines bring clear numbers, clear rules, and clear timelines. For parents in Tier-2 and Tier-3 cities, this scheme offers a low-cost and disciplined way to save for a child’s long-term future — starting with just ₹250.
Sometimes, starting small at the right time makes the biggest difference later.
