PFRDA issues NPS Vatsalya Scheme Guidelines 2025 to strengthen long-term financial security for Minors

**Executive Summary** The Pension Fund Regulatory and Development Authority (PFRDA) has issued the NPS Vatsalya Scheme Guidelines 2025, effective January 13, 2026. This scheme aims to strengthen long-term financial security for minors by outlining eligibility, contribution, withdrawal, and transition provisions for early pension savings. Stakeholders are advised to consult the full guidelines for comprehensive details. The scheme was announced in the Union Budget for FY 2024-25 and subsequently launched on 18 September, 2024. **Key Points / Main Content** * **Eligibility:** * Open to all Indian citizens, including NRI/OCI, below 18 years of age. * The minor is the sole beneficiary. * Account is opened in the name of the minor and operated by the guardian. * **Contribution:** * Minimum initial and annual contribution: ₹250. * No maximum limit on contribution. * Contributions can also be gifted by relatives and friends. * **Pension Fund Selection:** * The guardian can choose any one Pension Fund registered with PFRDA. * **Partial Withdrawal Provisions:** * Allowed after the completion of three years from account opening. * Up to 25% of own contributions (excluding returns) is permitted. * Permitted for education, medical treatment, and specified disabilities. * Allowed twice before 18 years and twice between 18-21 years, subject to conditions. * **Upon Attaining Majority:** * Fresh KYC is mandatory upon attaining 18 years. * Options available till 21 years: * Continue under NPS Vatsalya. * Shift to NPS Tier I (All Citizen Model or any other applicable model). * Exit with: * Up to 80% as a lump sum. * Minimum 20% to be annuitised. * Full withdrawal permitted if the corpus is ₹8 lakh or less. * **Community-Level Workers:** * A targeted incentivisation framework is introduced for community-level workers such as Anganwadi workers, ASHAs, and Bank Sakhis, recognizing their role in creating awareness and facilitating onboarding. **Impact Analysis** **Parents and Legal Guardians:** * **Impact:** Enabled to systematically build long-term savings for their children from an early age with a provision to shift to the National Pension System upon attaining majority. * **Action Required:** Open and manage the NPS Vatsalya account for their minor children, select a Pension Fund, and adhere to the contribution and withdrawal guidelines. **Minors:** * **Impact:** Beneficiaries of a contributory savings and long-term financial security scheme. * **Action Required:** No direct action required until attaining majority, at which point KYC is mandatory, and options regarding the continuation or exit from the scheme must be exercised. **Pension Fund Regulatory and Development Authority (PFRDA):** * **Impact:** Responsible for the regulatory oversight and implementation of the NPS Vatsalya Scheme. * **Action Required:** Ensure registered Pension Funds comply with the guidelines, monitor the scheme's performance, and update stakeholders on any changes. **Community-Level Workers (Anganwadi workers, ASHAs, and Bank Sakhis):** * **Impact:** Provided with a targeted incentivisation framework for creating awareness and facilitating onboarding. * **Action Required:** Promote the scheme in rural and semi-urban areas and facilitate the enrollment of eligible minors.

Key Entities Referenced