What is the minimum contribution for NPS Vatsalya?

It was ₹1,000 a year at launch in 2024. PFRDA's NPS Vatsalya Scheme Guidelines 2025 reduced it to ₹250, with no upper limit.

Can the money be used for the child's college fees?

Partly. After three years, up to 25% of the contributions can be withdrawn for education, treatment of specified illnesses or a disability above 75%, twice before 18 and twice between 18 and 21.

Does NPS Vatsalya save tax in the new regime?

No. The deduction of up to ₹50,000 is available only in the old regime, and the limit is shared with the parent's own NPS deduction.

What happens if the corpus is small at 18?

If it is ₹8 lakh or less, it can be withdrawn in full. Above that, up to 80% can be taken as a lump sum and at least 20% must buy an annuity, or the child can move to regular NPS.

NPS Vatsalya: NPS accounts for children

Updated 11 October 2026

NPS Vatsalya is a National Pension System account for a child under 18, opened and run by a parent or guardian in the child's name. Launched on 18 September 2024, it lets the money grow in pension funds until the child turns 18, when the child can carry on, move to regular NPS or exit under set rules. Parents can claim contributions under the ₹50,000 NPS deduction in the old tax regime.

Who can open it

Any child below 18 who is an Indian citizen, including NRI and OCI children, can have an account. The child is the only beneficiary, and the parent or guardian operates it until 18. You need proof of the child's date of birth (birth certificate, school certificate, PAN or passport) and the guardian's KYC with PAN or Form 60. Accounts can be opened at banks and post offices that act as NPS Points of Presence, or online through eNPS.

How much you need to put in

At launch the minimum was ₹1,000 a year. PFRDA's NPS Vatsalya Scheme Guidelines 2025, reported in January 2026, cut it to ₹250, with no upper limit, and relatives and friends can also contribute as gifts. The guidelines take effect as PFRDA's systems are ready, so check the current minimum with your bank or on eNPS.

Where the money is invested

The guardian picks one PFRDA-registered pension fund and an investment choice. Because the horizon is long, the 2025 guidelines keep a large equity share, reported at 50% to 75% of the corpus, with the rest in government securities and corporate bonds. Returns are market-linked and not guaranteed.

Withdrawals before 18

Three years after opening, up to 25% of the contributions (not the returns) can be withdrawn for the child's education, treatment of specified illnesses, or a disability above 75%. Under the 2025 guidelines this is allowed twice before 18 and twice more between 18 and 21, on a simple declaration.

What happens at 18

The child must complete fresh KYC in their own name. Until 21, they can then:

continue in NPS Vatsalya;
move to a regular NPS Tier I account under the All Citizen model; or
exit, taking up to 80% as a lump sum and putting at least 20% into an annuity. If the total corpus is ₹8 lakh or less, all of it can be withdrawn.

Moving to regular NPS keeps the money working for retirement. The rules from then on are in our guide to NPS withdrawal rules.

Tax benefit for parents

Budget 2025 allowed a parent or guardian to claim contributions to NPS Vatsalya under the additional NPS deduction of up to ₹50,000 (formerly section 80CCD(1B); in the Income-tax Act, 2025 it is section 124(3), which section 124(4) extends to a minor's account). It is available only in the old regime, and the ₹50,000 is shared with your own NPS contributions; it is not an extra ₹50,000. See NPS tax benefits and old vs new tax regime.

Worked example. A parent puts in ₹10,000 at the end of every year for 18 years, ₹1,80,000 in all. If the fund earns 10% a year (an assumption, not a promise), the corpus at 18 is ₹10,000 × (1.1¹⁸ minus 1) ÷ 0.1 = ₹10,000 × 45.599 = about ₹4,55,992. That is below ₹8 lakh, so under the 2025 guidelines the child could withdraw it all at 18 or keep it invested. If the parent is in the old regime at the 20% slab and has room in the ₹50,000 limit, each ₹10,000 contribution saves ₹10,000 × 20.8% = ₹2,080 in tax (20% plus 4% cess).

If the child or guardian dies

If the child dies, the whole corpus is paid to the guardian. If the guardian dies, a new guardian is registered after fresh KYC. If both parents die, the child's legal guardian can keep the account going, with or without further contributions, until the child turns 18.

Is it a good idea?

NPS Vatsalya suits parents who want a very long-term, low-cost, equity-heavy account that nudges the child towards retirement saving. The trade-offs: access before 18 is limited, any corpus above ₹8 lakh at exit means a 20% annuity, and returns are not guaranteed. Many families use it alongside, not instead of, savings meant for school and college fees. Run your own figures in the NPS calculator; official information is on the PFRDA website.