NPS Vatsalya Scheme – Pension Account for Your Child Explained

Updated on June 18, 2026

NPS Vatsalya is a pension savings scheme launched by the Government of India in August 2024. It allows parents and guardians to open a National Pension System (NPS) account in the name of a minor child. The account grows through investments in equities and bonds over the child’s school and college years, then transitions into a regular NPS account when the child turns 18.

The idea is simple: the earlier you start saving for retirement, the more the money compounds. A child who has 40 years until retirement has far more time for invested money to grow than someone who starts at 30.

How NPS Vatsalya Works

• A parent or legal guardian opens the account on behalf of a minor (below 18 years).
• The minimum contribution is Rs. 1,000 per year. There is no maximum limit.
• Money is invested in a mix of equities, corporate bonds, and government securities depending on the investment option chosen.
• The account earns market-linked returns, not a fixed interest rate.
• When the child turns 18, the account is converted into a regular NPS Tier I account in the child’s name.
• At 60, the corpus can be partially withdrawn and the rest used to purchase an annuity (regular pension).

Investment Options Under NPS Vatsalya

Option	Equity Allocation	Who It Suits
Auto Choice (Aggressive)	Up to 75%	Long horizon, comfortable with market swings.
Auto Choice (Moderate)	Up to 50%	Balanced risk.
Auto Choice (Conservative)	Up to 25%	Lower risk, lower growth.
Active Choice	You decide the split	Experienced investors who want full control.

For young children with 15 or more years before they turn 18, an aggressive equity allocation typically works better over the long term. You can switch investment options once per year.

What Happens When the Child Turns 18

The minor account automatically converts into a regular NPS Tier I account once the child completes KYC at age 18. The child can then:

• Continue contributing until age 60 for maximum retirement corpus.
• Make one partial withdrawal of up to 25% of own contributions after 3 years for education, medical treatment, or starting a business.
• At 60, withdraw up to 60% of the total corpus as a lump sum (tax-free) and use the remaining 40% to buy an annuity.

If the child wants to exit before 60, they can withdraw 20% as a lump sum but must use 80% to buy an annuity.

Documents Needed to Open NPS Vatsalya

• Parent or guardian’s KYC documents: Aadhaar card and PAN card.
• Child’s date of birth proof: birth certificate, school leaving certificate, or Aadhaar card of the child.
• Photograph of the parent or guardian.
• Bank account details of the parent (for fund transfers).

How to Open an NPS Vatsalya Account

Online Method

1. Visit enps.nsdl.com or the NPS Trust website.
2. Click “NPS Vatsalya” and select “Register Now”.
3. Complete the parent or guardian’s KYC using Aadhaar OTP or net banking.
4. Enter the child’s personal details and date of birth.
5. Choose an investment option and pension fund manager.
6. Make the minimum contribution of Rs. 1,000 to activate the account.
7. Your PRAN (Permanent Retirement Account Number) is generated and sent to your registered email and phone.

Offline Method

1. Visit a Point of Presence (PoP) such as your bank branch, post office, or registered NPS service provider.
2. Fill in the NPS Vatsalya registration form.
3. Submit KYC documents for both parent and child.
4. Make the initial contribution. The PoP processes the account opening and sends your PRAN.

Banks offering NPS Vatsalya include SBI, Bank of Baroda, Canara Bank, and several private banks. Post offices also accept registrations.

Tax Benefits for Parents

Contributions made to NPS Vatsalya are eligible for a deduction of up to Rs. 50,000 per year under Section 80CCD(1B) of the Income Tax Act, over and above the Rs. 1.5 lakh limit under Section 80C. This is the same deduction available for regular NPS contributions.

Note: This deduction applies under the old tax regime. Under the new default tax regime, Section 80CCD deductions are not available unless the employer contributes to NPS on your behalf.

Frequently Asked Questions

Can a grandparent open NPS Vatsalya for a grandchild?

Yes. A legal guardian, which includes grandparents who are legal guardians, can open the account. The key requirement is that the adult opening the account must be the legal guardian of the minor.

What if the child does not want to continue NPS after turning 18?

They can exit the scheme but must use at least 80% of the corpus to buy an annuity. The remaining 20% can be taken as a lump sum. However, if the corpus is less than Rs. 2.5 lakh at maturity, the entire amount can be withdrawn without buying an annuity.

Is NPS Vatsalya the same as Sukanya Samriddhi Yojana?

No. Sukanya Samriddhi is only for girl children and matures at age 21 (with partial withdrawal at 18 for marriage). NPS Vatsalya is open to children of both genders and is specifically designed for building a retirement corpus that the child can access at age 60. Both can be opened simultaneously for a girl child if you want both medium-term and long-term savings.

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