PFRDA Issues Norms For NPS Vatsalya

Mumbai: The pension fund regulator-Pension Fund Regulatory and Development Authority (PFRDA) has issued the latest guidelines for National Pension System (NPS) Vatsalya scheme, outlining the minimum investment, asset mix, exit, withdrawal options and other details. Launched pursuant to the Union Budget of the Financial Year (FY 2024-25), NPS Vatsalya Scheme is long term savings scheme for securing the future retirement of minor children by their parents or legal guardians.

The norms specify the asset allocation limits for NPS Vatsalya investments permitting higher equity exposure of 50-75 per cent, government securities at 15–20 per cent and around 10-30 per cent in debt instruments.

Partial withdrawals will be allowed after three years from account opening date for specific purposes such as education, treatment of specified illnesses, disability exceeding 75 per cent. However, withdrawals are capped at 25 per cent of total contributions (excluding returns). Guardians or subscribers may make up to two partial withdrawals before the subscriber turns 18. After attaining majority and completing KYC, the subscriber can make two more partial withdrawals between ages 18 and 21.

Exit and continuation options are provided when the beneficiary turns 18. Subscribers may continue in the NPS Vatsalya scheme for up to three more years. Fresh KYC and nomination details are mandatory. Subscribers can choose to shift to the NPS All Citizen Model, withdraw up to 80 per cent as lump sum with annuitisation of the balance. If the total corpus is less than Rs 8 lakh, the entire amount may be withdrawn as a lump sum. If no choice is exercised by age 21, the account will automatically shift to a high-risk equity-oriented option under the Multiple Schemes Framework of the same pension fund.