Context: Recently, the Union Finance Minister launched the National Pension Scheme (NPS) Vatsalya scheme. 

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• This new initiative aims to secure children's financial future by allowing parents to invest in pension accounts on their behalf.
• The Finance Minister also unveiled an online platform for subscribing to NPS Vatsalya, released a scheme brochure, and distributed Permanent Retirement Account Number (PRAN) cards to new minor subscribers.

About NPS Vatsalya

• NPS Vatsalya is an extension of the existing National Pension Scheme (NPS) but focuses on children. 
• Earlier, this scheme was announced by Sitharaman in the Union Budget 2024-25.
• NPS Vatsalya offers flexible contributions, allowing parents to invest as little as ₹1,000 annually in their child's name, making it accessible to families from all economic backgrounds.
• Contributions to the account are invested in market-linked securities such as equities and bonds, aiming to provide higher returns than traditional fixed-income alternatives. 
• Also, it is important to note that there is no maximum limit on the contribution amount.
• The Scheme will be managed under the supervision of the Pension Fund Regulatory and Development Authority (PFRDA) and Permanent Retirement Account Number (PRAN) cards will be issued to newly registered minor subscribers. 
• NPS Vatsalya account can be opened through Points of Presence (POPs) which include major banks, India Post, Pension Funds, etc. and the online platform, e-NPS. 

Key Features of NPS Vatsalya

• Long-term benefits: Under this scheme, when the child attains majority, his/her account will be easily converted into a standard NPS account. 
• Eligibility: The Scheme is accessible to all Indian citizens and Non-Resident Indians (NRIs), with accounts opened by legal guardians in the child's name.
• For NRI and OCI subscribers, contributions can be made from their NRE (Non-Resident External) and NRO (Non-Resident Ordinary) accounts. 
• Partial Withdrawal: After serving the minimum required lock-in period of three years, depositors will become eligible for the option of up to three withdrawals for reasons including education, a specific disease, amounting to up to 25% of the corpus.

Investment Options Under NPS Vatsalya 

A guardian may select any pension fund that is PFRDA-registered:

• Default Choice: Moderate Life Cycle Fund - LC-50 with 50% equity.
• Auto Choice: Guardian can choose a Life cycle fund -Aggressive LC-75 with 75% equity, Moderate LC-50 with 50% equity, or Conservative LC-25 with 25% equity.
• Active Choice:  Guardian actively decides the allocation of funds across equity (up to 75%), corporate debt (up to 100%), government securities (up to 100%), and alternate assets (up to 5%).