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National Pension System

NPS VATSALYA
NPS VATSALYA
NPS Vatsalya: Scheme for Minors, Eligibility, Benefits and Rules

NPS Vatsalya is a voluntary contributory savings and long-term financial security scheme designed exclusively for minors. A parent or legal guardian opens and operates the account in the name of the minor. The scheme is covered under the National Pension System (NPS) and regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

An account can be opened for an Indian citizen below 18 years of age, including eligible NRIs and OCIs. The minimum contribution is ₹250 at opening and ₹250 in each financial year, with no maximum contribution limit. Contributions are invested by a PFRDA-registered Pension Fund, and returns are market-linked.

NPS Vatsalya at a Glance
Feature Details
Eligibility Indian citizen below 18 years, including eligible NRIs and OCIs
Account holder Minor is the subscriber; parent or legal guardian operates the account until the subscriber attains majority (18 years)
Beneficiary Minor subscriber
Minimum contribution ₹250/- at the time of registration/opening and ₹250/- in each financial year
Maximum contribution No maximum limit
Returns Market-linked
Partial withdrawal Up to 25% of own contributions, excluding returns, for specified purposes
At 18 Continue up to 21 years or shift entire corpus to NPS, or exit, subject to applicable rules
What is NPS Vatsalya?

NPS Vatsalya was announced in the Union Budget 2024-25 and launched on 18 September 2024 by the Government of India. It is covered under the National Pension System under sections 12(1)(a) and 20 of the Pension Fund Regulatory and Development Authority Act, 2013. The scheme is governed by the NPS Vatsalya Scheme Guidelines 2025 and amendments thereto. The scheme promotes early saving, financial literacy, financial planning and long-term financial security for minors.

The minor is the subscriber and sole beneficiary. A Permanent Retirement Account Number (PRAN) is issued in the name of the minor, while the parent or legal guardian operates the account until the minor attains 18 years.

Who is eligible for NPS Vatsalya?

An NPS Vatsalya account may be opened for an eligible Indian citizen below 18 years of age, including eligible Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs). The scheme is gender-neutral and available to all eligible minors, irrespective of gender. The account is opened and operated by the parent or legal guardian exclusively for the benefit and financial future of the minor.

Key Benefits of NPS Vatsalya

Transparent: The account can be accessed online, and applicable disclosures by intermediaries and Pension Funds support transparency.

Market-linked returns: NPS Vatsalya provides market-linked returns based on the performance of the selected Pension Fund; returns are not guaranteed.

Tax efficient: Eligible tax benefits are available under the Income-tax Act, 2025.

Empower your child: Early exposure to saving and financial planning helps build responsible financial behaviour for life.

Financial discipline: Small, regular investments help build a strong habit of saving and planning.

Power of compounding along with financial security: Starting early allows money to grow significantly over time through compounding, creating a financial cushion for the future.

Documents Required for NPS Vatsalya
For Documents / requirement
Minor Proof of date of birth: birth certificate, school leaving certificate, matriculation certificate, PAN or passport, as applicable
Parent / legal guardian KYC document such as Aadhaar, Driving Licence, Passport, Voter ID, NREGA Job Card or National Population Register document, along with PAN or Form 60
Bank account Optional for resident Indians at opening; mandatory for NRIs/OCIs. Required as applicable for withdrawal/exit.
NPS Vatsalya Contribution

The minimum contribution is ₹250/- at account opening, ₹10/- for subsequent contributions, and minimum ₹250/- in each financial year. There is no maximum contribution limit. There is no restriction on the number of contributions in a financial year. Parents, guardians, relatives, and friends may contribute through registered PoPs, online facilities (mobile app/website) offered by PoPs, eNPS, UPI Apps, and other electronic modes approved by PFRDA from time to time.

The account does not automatically cease merely because a contribution is not made in a particular financial year. It continues to be governed by the applicable NPS Vatsalya rules and operational requirements.

NPS Vatsalya Investment and Returns

The guardian can choose a Pension Fund registered with PFRDA. Contributions are invested by the selected Pension Fund in accordance with the applicable PFRDA investment framework.

Pension Funds may design their own asset allocation for NPS Vatsalya, allocating up to 100% to Equity, similar to Multiple Scheme Framework (MSF) schemes, or alternatively may follow an indicative pattern with limits of 75% for equity, 20% for government securities, 30% for debt instruments and 10% for money market instruments.

Interest rate / returns

NPS Vatsalya does not provide a fixed or guaranteed interest rate. Returns are market-linked and can vary with the performance of the selected Pension Fund and investment approach.

NPS Vatsalya Charges

Charges are the same as under the NPS All Citizen Model, as prescribed by PFRDA from time to time.

NPS Vatsalya Partial Withdrawal Rules
Condition Provision
Permitted purposes Education of the minor subscriber, treatment of specified illnesses, and disability of more than 75% of the minor subscriber
Lock-in Minimum 3 years from account opening
Maximum withdrawal Up to 25% of the minor subscriber's own contributions, excluding returns
Number of Partial Withdrawals Before 18 - Maximum two withdrawals
Between 18 to 21 - Two additional withdrawals, subject to KYC requirements
What happens to NPS Vatsalya when the Child turns 18?

On attaining 18 years, the subscriber must complete fresh KYC and furnish the required nominee details. Management of the account then passes to the subscriber.

Option Provision
Continue in NPS Vatsalya Continue in the scheme up to 21 years.
Shift to NPS Shift the entire accumulated corpus to NPS under the All Citizen Model or another applicable model, after required KYC.
Exit If corpus is below ₹8 lakh, the entire corpus can be withdrawn in lump sum.
If corpus is ₹8 lakh or more, up to 80% can be withdrawn as lump sum and at least 20% is to be utilised for purchase of annuity.
What happens if no option is exercised by age 21?

If no option is exercised between the age 18 and 21, the account is automatically shifted to a higher-equity scheme under the Multiple Schemes Framework of the same Pension Fund. Thereafter, the account is governed by the PFRDA (Exits and Withdrawals under the NPS) Regulations, 2015.

NPS Vatsalya tax benefits
Stage Old Tax Regime New Tax Regime
Contribution Deduction up to ₹50,000 for eligible contribution by the parent/guardian under Section 124(4) of the Income-tax Act, 2025 (corresponding to Section 80CCD(1B) of the Income-tax Act, 1961). No deduction is available for this contribution.
Partial Withdrawal Partial withdrawal up to 25% of own contributions is exempt under applicable provision in Schedule III of the Income-tax Act, 2025 (corresponding to Section 10(12BA) of the Income-tax Act, 1961). Same exemption as applicable under the old tax regime.
Exit / Closure Lump-sum withdrawal up to 60% of the corpus is tax-exempt under Schedule II (Table: S. No. 6) of the Income-tax Act, 2025. Amount used for purchase of annuity is exempt at purchase under Section 124(9). Same exemption as applicable under the old tax regime.
Death of minor Amount received by the parent, guardian or nominee, as applicable, is not treated as their income. Same exemption as applicable under the old tax regime.
Frequently Asked Questions about NPS Vatsalya

How can I open an NPS Vatsalya account online?
An account can be opened through the eNPS platform or online facilities provided by registered Points of Presence.

What is the NPS Vatsalya age limit?
The account is for an eligible minor below 18 years of age. An existing subscriber may continue under the applicable provisions up to 21 years.

How many NPS Vatsalya accounts can be opened for one child?
A single NPS Vatsalya account may be opened for a minor, subject to applicable scheme and operational provisions.

What is PRAN in NPS Vatsalya?
PRAN means Permanent Retirement Account Number. It is issued in the name of the minor subscriber and identifies the NPS account.

Can the Pension Fund be changed?
Yes, once in a financial year.

Who regulates NPS Vatsalya?
NPS Vatsalya is regulated by the Pension Fund Regulatory and Development Authority (PFRDA).

Disclaimer: This content is for general information only. Users are advised to refer to the applicable Regulations, Guidelines, Circulars and Instructions issued by PFRDA from time to time for official and up-to-date information. Tax treatment is subject to the applicable income-tax law and amendments thereto.

An individual meeting the following eligibility criteria can voluntarily subscribe to the National Pension System (NPS):

  • Must be an Indian Citizen (resident or non-resident) or an Overseas Citizen of India (OCI)
  • Should be aged between 18 to 85 years
  • Must comply with Know Your Customer (KYC) requirements as prescribed in the NPS subscriber application form

Note:

  • Hindu Undivided Families (HUFs) and Persons of Indian Origin (PIOs) are not eligible to subscribe to NPS
  • NPS is strictly an individual pension account and cannot be opened on behalf of another person
  • The applicant must be legally competent to enter into a contract under the Indian Contract Act

The National Pension System (NPS) offers the following key benefits to subscribers:

  • Regulated - NPS is regulated by PFRDA, a statutory authority established under the PFRDA Act, 2013.
  • Pension for All - Can be voluntarily subscribed to by any Indian Citizen (resident, non-resident, or Overseas Citizen of India).
  • Low Cost - One of the lowest-cost pension schemes globally, enabling cost-effective retirement planning.
  • Flexible - Subscribers can choose their Point of Presence (PoP) (Canara Bank is also one of the PoPs), Central Recordkeeping Agency (CRA), Pension Fund, and Asset Allocation.
  • Portable - NPS account is portable across employment types and geographic locations, ensuring continuity.
  • Tax Efficient - Attractive tax benefits under the Income Tax Act, 1961, are available to NPS subscribers.
  • Optimum Returns - Provides market-linked returns based on investment decisions made by the subscriber.
  • Transparent - Subscribers enjoy 24x7 online access to their NPS account, with mandatory public disclosures ensuring transparency.

An NPS individual pension account can be opened through Online and Offline both modes.

Offline Mode: To open an Individual Pension Account under NPS, the subscribers are required to submit the Subscriber Registration Form (CSRF/NRSF/online format) along with the following documents via physical or online mode:

For Resident Individuals:

  • One recent photograph
  • PAN Card
  • Proof of Address

For Non-Resident Indians (NRIs) and Overseas Citizens of India (OCIs):

Documents Required for NPS Enrolment

Non-resident Individual (NRI) Overseas Citizen of India (OCI)
One Recent Photograph One Recent Photograph
PAN Card PAN Card
Indian Passport OCI Card
Proof of Address - India Proof of Address - Foreign Country
Proof of Bank Account (NRE/NRO) Proof of Bank Account (NRE/NRO)

Refer to the subscriber registration form for the full list of acceptable proofs.

Online Mode:

  • By visiting Canara Bank Corporate Website
  • Through Internet Banking
  • Through Mobile Banking

Types of NPS Accounts - Tier I and Tier II

Under the National Pension System (NPS), there are two types of accounts available to subscribers:

Tier I Account – Individual Pension Account

  • Default pension account under NPS
  • Treated as a retirement savings account
  • Withdrawals allowed in accordance with Pension Fund Regulatory and Development Authority (Exits and Withdrawals under the National Pension System) Regulations, 2015 and amendment issued thereunder
  • Eligible for tax benefits under the Income Tax Act, 1961

Tier II Account – Optional Investment Account

  • Available only to subscribers with an active Tier I account
  • No restrictions on withdrawals - At any time the subscriber can withdraw
  • It’s an investment account and not eligible for tax benefits

Note:

  • NRIs/OCIs with Tier I accounts are not permitted to activate Tier II account
  • Subscribers may choose different Pension Funds and Investment Options for Tier I and Tier II accounts

Contribution - How to Contribute to Your NPS Account?

A subscriber can make unlimited contributions to their Tier-I or Tier-II NPS account, with no upper limit on the amount, using any of the following modes:

1. Physical Mode

  • Visit Canara Bank Branch
  • Deposit contribution via cheque or cash along with the NPS Contribution Instruction Slip

2. Online Mode

a) Web-Based Options:

  • Log in to your NPS Account at CRA Site
  • Use the online contribution facility provided by Canara Bank at corporate website
  • Using Canara Bank Internet Banking
  • Access the eNPS platform of NPS Trust

b) NPS Mobile App

  • Using the Canara Bank ai1 application
  • Login and contribute using CRA application

c) D-Remit Facility

  • Create a Virtual ID linked to PRAN, with the option to use UPI and QR code

The contributions will be invested as per the subscriber’s selected Pension Fund and asset allocation, as recorded with the Central Recordkeeping Agency (CRA).

Investment Choices

The NPS contributions made by a subscriber are invested as per the choices (Pension Fund and Asset Allocation) selected and recorded with the Central Recordkeeping Agency (CRA).

(A) Selection of Pension Funds

  • Subscribers can select any one of the Pension Funds registered with PFRDA.
  • Subscriber can change the pension fund once in a year.

(B) Investment Choices for Asset Allocation provided under Common Schemes

Subscriber contributions are invested by the chosen Pension Fund in compliance with PFRDA’s investment guidelines across the following Asset Classes:

  • Equity (E)
  • Corporate Bonds (C)
  • Government Securities (G)

Subscribers can select their investment approach via:

1. Active Choice

  • Subscribers actively decide the percentage allocation to each asset class:
  • Equity (E): Up to 75%
  • Corporate Bonds (C): Up to 100%
  • Government Securities (G): Up to 100%

2. Auto Choice

  • Funds are automatically invested in pre-defined proportions across Equity, Corporate Bonds, and Government Securities based on the subscriber’s age:
  • Allocation remains constant until age 35
  • Equity allocation reduces gradually with age

Auto Choice is available through the following Life Cycle Funds:

Sr No Life Cycle Funds Equity Allocation (%)
1 Life Cycle 25 – Low (5E / 55Y) 25% up to 35 years, falling to 5% at 55+
2 Life Cycle 50 – Moderate (10E / 55Y) 50% up to 35 years, falling to 10% at 55+
3 Life Cycle 75 – High (15E / 55Y) 75% up to 35 years, falling to 15% at 55+
4 Life Cycle – Aggressive (35E / 55Y) 50% up to 45 years, falling to 35% at 55+

Re-allocation among asset classes under Life Cycle Funds:

Age Life Cycle 75 – High Life Cycle 50 – Moderate Life Cycle 25 – Low Life Cycle – Aggressive
ECG ECG ECG ECG
Upto 35 years 751015 503020 254530 ---

Multiple Scheme Framework (MSF) Under NPS

  • Under the Multiple Scheme Framework (MSF), you have the freedom to choose the pension scheme offered by Pension Fund, based on your retirement needs and risk comfort.
  • From 1 October 2025, non-government NPS subscribers can invest in multiple schemes using a single or multiple PRAN linked to their PAN.
  • All your investments can be viewed together through a single consolidated statement.
  • Pension Funds offer different schemes designed for various subscriber groups such as professionals, self-employed individuals, gig workers, and corporate employees.
  • Each scheme provides different risk options:
  • Moderate Risk – balanced growth with controlled risk
  • High Risk – higher growth potential with equity investment of up to 100%
  • Low Risk – lower risk options may also be available in some schemes
  • All schemes follow PFRDA’s investment guidelines, clearly display their risk level, and use benchmarks so you can easily track how your investment is performing.
  • Your chosen scheme has a minimum lock-in period of 15 years, encouraging long-term retirement savings.
  • During this period, you can move to common NPS schemes, but cannot switch between MSF schemes.
  • After 15 years, you may switch between MSF schemes or exit, as per normal NPS rules.
  • The charges are capped at 0.30% per year, keeping costs low and transparent for you.

The subscribers can change the asset allocation/investment choice four times in a year.

Each intermediary is entitled to recover the following prescribed charges from the subscriber towards the services rendered by them (excluding GST and other taxes as applicable):

  • One Time Onboarding charge - Rs. *200/- per new account (equivalent of Rs. 50/- on quarterly basis will be deducted, payable to PoP (Bank) in the month subsequent to the quarter in which on-boarding is completed).
  • For onboarding undertaken through a fully digital and non-face-to-face mode, between PoP and the subscriber, a reduced one-time onboarding charge of Rs. 100/- may be applicable.
  • Annual charges  - 0.20% p.a. of the AUM payable to PoP (Bank) on quarterly basis, in accounts other than Dormant accounts, applicable to all existing NPS accounts as well.

Tier-II transaction charges are the same as Tier-I.

Withdrawal and Exit under NPS Common Scheme (CS) and MSF:

Particulars Withdrawal and Exit Details
Entry and Exit Age Entry and exit age increased to 85 years.
Lock-in period All Citizen Model (CS & MSF): 5-year minimum subscription (lock-in) period removed.
Normal Exit - After 60 years or 15 years All Citizen Model (CS & MSF): Vesting period → 15 years or any higher period stipulated under a scheme; or till 60 years of age (whichever is earlier).

I) For corpus up to ₹12 lakh:
a) ≤ ₹8 lakh → 100% lumpsum or SLW or SUR or other approved options.
b) > ₹8 lakh ≤ ₹12 lakh → Up to ₹6 lakh as lumpsum; Balance as SUR for min. 6 years or annuity.
II) For any corpus → Up to 80% lumpsum & At least 20% annuity applies.
Premature Exit - Before 60 year or 15 years Up to 20% lumpsum; At least 80% annuity.

For corpus ≤ ₹5 lakh → 100% lumpsum or SLW (Systematic Lumpsum Withdrawal) or SUR (Systematic Unit Redemption) or other approved pay-outs.
Exit due to Death 100% lumpsum permitted.
Additionally, option for availing SLW or SUR or annuity or other approved options.
Automatic continuation 15-day prior intimation requirement removed across sectors.
Financial assistance against pension corpus Subscriber can seek financial assistance from a regulated financial institution (lien up to 25% of own contribution). Separate Guidelines to be issued.
Frequency of Partial Withdrawal (PW) i) Before 60 years age: Frequency: 4 times; Interval: 4 years between PWs.
ii) Post 60 years age: Frequency: unlimited; Interval: 3 years between PWs (max 25% of contribution).

Exit for who joined after 60 years of age

Exit Type Conditions and Limits
Exit No lock-in period. Up to 80% lumpsum; At least 20% annuity.

I) For corpus ≤ ₹12 lakh → 100% lumpsum or SLW or SUR or other approved options.

II) For any corpus → Up to 80% lumpsum & At least 20% annuity applies.
Exit due to Death 100% lumpsum permitted.
Additionally, option for availing SLW or SUR or annuity or other approved options.

Assistant General Manager

Name: Abhay Kumar

Address:
Government Services Vertical,
Strategy, Resources & Govt. Services Wing,
Head Office (Annex), Scope Minar,
Nirman Vihar, Laxmi Nagar,
Delhi - 110092

Phone: 011-20825016

Email: abhaykumar1@canarabank.com

Mobile: +91 8796300992

Government Services Section

Wing: Resources Wing

Address:
Head Office Annex,
New Delhi - 110092

Email: honps@canarabank.com

Contact: 1800 1030

The Office of Ombudsman

Pension Fund Regulatory and Development Authority

Tower E, 5th Floor, E-500, World Trade Center

Nauroji Nagar, New Delhi -110029,

Phone No.: 011-4071 7900,

Email Id: ombudsman@pfrda.org.in


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