New Delhi: Union Finance Minister Nirmala Sitharaman launched the NPS Vatsalya scheme on 18 September 2024, offering parents the opportunity to open a pension account for their children under 18 years. The scheme requires a minimum annual contribution of ₹1,000, and after reaching 18, the account can be converted into a regular National Pension System (NPS) account. Pension benefits will be available based on the accumulated corpus after the beneficiary turns 60.

The launch of NPS Vatsalya follows an announcement made by the minister during her budget speech in July. Sitharaman highlighted the long-term benefits of saving for retirement early, emphasising the potential for competitive returns through the scheme.

The NPS, originally launched in 2004 for government employees, has since expanded to the private sector, with impressive growth over the past decade. “The NPS has grown at a 37% compound annual growth rate (CAGR) with 18.6 million subscribers and over ₹13 lakh crore in assets under management,” Sitharaman stated. Private sector employees have seen a 43% asset growth, compared to 27% for government employees.

The finance minister also highlighted the strong returns generated by NPS for non-government subscribers since 2020, with equity assets delivering 14% CAGR, corporate debt at 9.1%, and government securities at 8.8%.

Additionally, Sitharaman spoke about the Unified Pension Scheme (UPS) for central government employees, set to take effect from 1 April 2025. The scheme combines features of the Old Pension Scheme (OPS) and NPS, offering an assured pension of 50% of the average basic pay before retirement, along with inflation indexation. State governments have the option to adopt the scheme. /BI