The Pension Fund Regulatory and Development Authority (PFRDA) has released the NPS Vatsalya Scheme Guidelines, 2025, outlining operational rules for the National Pension System Vatsalya, a long-term savings scheme created specifically for minors.

What is NPS Vatsalya?

NPS Vatsalya was announced in the Union Budget 2024–25 and officially launched on 18 September 2024 by the Finance Minister, Nirmala Sitharaman. The scheme allows parents and legal guardians to start structured retirement-linked savings for children from an early age, with the account later transitioning smoothly to the regular National Pension System once the child becomes an adult.

The new guidelines are aligned with amendments to the PFRDA (Exits and Withdrawals under NPS) Regulations, 2015, providing flexibility in exit and partial withdrawals while ensuring long-term financial protection for minors.

Key features of NPS Vatsalya

Eligibility

• Open to all Indian citizens, including NRI and OCI minors
• The minor is the sole beneficiary
• Account is opened in the child’s name and operated by a parent or legal guardian

Contributions

• Minimum ₹250 as initial and annual contribution
• No upper contribution limit
• Relatives and friends can also contribute as gifts

Pension fund selection

• Guardian can choose any PFRDA-registered Pension Fund

Partial withdrawals

• Allowed after three years from account opening
• Up to 25% of self-contributed amount (excluding returns)
• Permitted for specific purposes such as:
  • education
  • medical treatment
  • disability-related needs
• Withdrawal permissible:
  • twice before age 18, and
  • twice between 18 and 21, subject to conditions

After the minor turns 18

• Fresh KYC is compulsory
• Until age 21, the subscriber may:
  • continue under NPS Vatsalya, or
  • shift to NPS Tier I (All Citizen Model or other eligible models), or
  • exit the scheme, taking:
    • up to 80% as lump sum, and
    • minimum 20% through annuity
• Full withdrawal is allowed if total corpus is ₹8 lakh or less

Incentives for grassroots workers

The guidelines also introduce performance-based incentives for community functionaries such as Anganwadi workers, ASHAs, and Bank Sakhis. These groups will support awareness, enrollment, and hand-holding of subscribers, especially across rural and semi-urban geographies.

Summary

PFRDA has issued the NPS Vatsalya Scheme Guidelines, 2025, detailing rules for a pension-linked savings product designed for minors. The scheme allows parents and guardians to build long-term savings for children, offers flexible partial withdrawals, and provides options for continuation, transition to NPS Tier I, or exit once the minor turns 18. Contributions start at ₹250 with no upper limit, and incentives will be offered to grassroots workers to promote enrollment and awareness.

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