NPS Vatsalya Explained: A Complete Guide to Your Child’s Financial Security

Introduction

Financial literacy and early retirement planning are crucial for building lifelong financial security. The National Pension System (NPS) Vatsalya scheme allows parents and guardians to start a retirement fund for their children from a young age.

With just ₹1,000 annually, children can learn essential money management skills—earning, saving and spending wisely—while simultaneously securing their long-term financial future.

What is NPS Vatsalya?

NPS Vatsalya is a saving-cum-pension scheme regulated and administered by the Pension Fund Regulatory and Development Authority (PFRDA). The scheme is designed to give minors an early advantage in retirement planning while teaching them financial discipline.

It offers a transparent, professionally managed investment avenue regulated by PFRDA, ensuring that every contribution helps build a strong foundation for the child’s future.

Eligibility

• Open to all minor citizens of India (up to 18 years of age).
• The account is opened in the minor’s name but operated by a guardian.
• The minor is the sole beneficiary, ensuring complete ownership of the accumulated corpus.

How to Open an NPS Vatsalya Account

An NPS Vatsalya account can be opened via:

• Offline: Through Points of Presence (PoPs) registered with PFRDA, UTI Pension Fund.
• Online: Through the NPS Trust eNPS portal at npstrust.org.in.

The guardian operates the account until the child turns 18, after which it transitions seamlessly to a standard NPS Tier-I account.

Documents Required

For the minor:

• Proof of Date of Birth (Birth Certificate, School Leaving Certificate, Matriculation Certificate, PAN, or Passport).

For the guardian:

• KYC documents including Proof of Identity and address (Aadhaar, driving license, passport, voter ID, NREGA job card, or National Population Register).
• PAN of the guardian or Form 60 declaration (Rule 114B).

Upon successful registration, a Permanent Retirement Account Number (PRAN) is issued in the name of the minor.

Contribution Details

• Account opening contribution: Minimum ₹1,000 (no upper limit).
• Subsequent contributions: Minimum ₹1,000 per year (no upper limit).

This flexible structure ensures that parents can contribute according to their financial capacity while maintaining the habit of consistent saving.

Pension Fund Selection

Guardians can select any pension fund registered with PFRDA to manage the child’s corpus. These funds are professionally managed, ensuring transparency, regulatory oversight, and long-term capital growth.

Investment Choices

• Default Choice: Moderate Life Cycle Fund (LC-50) – 50% equity allocation.
• Auto Choice: Guardian can select based on risk appetite:
  • High (LC-75): 75% equity
  • Moderate (LC-50): 50% equity
  • Low (LC-25): 25% equity.
  • Aggressive Life Cycle
• Active Choice: Guardian can actively allocate funds across asset classes:
  • Equity (up to 75%)
  • Corporate Debt (up to 100%)
  • Government Securities (up to 100%)
  • Alternate Assets (up to 5%)

This flexibility empowers guardians to design a portfolio that aligns with their child’s long-term goals and risk tolerance.

Transition at Age 18

When the child turns 18:

• The NPS Vatsalya account automatically converts to an NPS Tier-I (All Citizen Model) account.
• Fresh KYC must be completed within three months of attaining 18 years.
• Once converted, all features, benefits, and exit norms of the standard NPS Tier-I account apply.

This seamless transition ensures continuity of investment and uninterrupted compounding.

Benefits of NPS Vatsalya

• Early financial start: Leverages the power of compounding from a young age.
• Financial awareness: Helps children understand saving, investing, and money management.
• Flexible contributions: Start small and increase gradually with income.
• Customisable investment strategy: Choose between active and auto modes based on comfort.
• Safety and regulation: Fully regulated by PFRDA, ensuring credibility and security.

How to Open an NPS Vatsalya Account?

Opening an account is straightforward:

Step-by-Step Process:

• Visit the UTI Pension Fund office near you
• Documents Required:
  • Minor’s Proof (Birth/School Certificate, etc.)
  • Guardian’s KYC (Aadhaar, Passport, etc.)

Start Early with UTI Pension Fund

UTI Pension Fund is one of the leading Pension Fund Managers under NPS, trusted by millions of investors for transparent, disciplined, and long-term wealth creation. By opening an NPS Vatsalya account with UTI Pension Fund, you give your child the power of early financial planning—helping them grow into financially independent and secure adults.

Secure your child’s tomorrow today. Start NPS Vatsalya with UTI Pension Fund. Visit www.utipension.com to begin.