PFRDA makes partial withdrawal, exit rules more attractive for NPS Vatsalya subscribers

New Delhi, Jan 13 (PTI) In a bid to make the NPS Vatsalya Scheme more attractive, PFRDA has made certain changes to the exit and withdrawal options under the scheme, designed exclusively for minors.

As part of the revised rules, partial withdrawals are allowed after 3 years from account opening.

Up to 25 per cent of own contributions (excluding returns) have been allowed for partial withdrawal for education, medical treatment and specified disabilities, the finance ministry said in a statement.

Allowed twice before 18 years and twice between 18-21 years, subject to conditions, it said.

So far, partial withdrawals can be made up to 3 times until the subscriber attains 18 years of age.

As regards the exit option, it said subscribers would have the option to shift to NPS Tier I (All Citizen Model or any other applicable model) or exit with up to 80 per cent as a lump sum, with a minimum of 20 per cent to be annuitised.

Full withdrawal permitted if corpus is Rs 8 lakh or less, it said.

Earlier, at least 80 per cent of the accumulated corpus available in the account must be utilized for the purchase of an annuity, and the remaining balance shall be paid in a lump sum.

NPS Vatsalya was announced in the Union Budget for FY 2024-25 and subsequently launched on September 18, 2024, by Finance Minister Nirmala Sitharaman.

The scheme enables parents and legal guardians 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.

In line with the amendments notified to the PFRDA (Exits and Withdrawals under NPS) Regulations, 2015, the NPS Vatsalya Guidelines lay down flexible provisions for long-term financial security of minors, while ensuring continuity of savings on attaining majority, it said.

Sharing key features of the scheme, it said, the minimum initial and annual contributions are Rs 250, and there is no maximum limit on contributions. Contributions can also be gifted by relatives and friends, it said.

The Guidelines introduce a targeted incentivisation framework for community-level workers such as Anganwadi workers, ASHAs and Bank Sakhis, recognising their role in creating awareness and facilitating onboarding, especially in rural and semi-urban areas, it said.

NPS Vatsalya aims to nurture a culture of savings, promote financial literacy from an early age and strengthen long-term financial planning, aligned with the national vision of Viksit Bharat by 2047, it said.

The Guidelines seek to bring clarity, transparency, and uniformity for all stakeholders, while supporting the broader objective of creating a pensioned and financially secure society, it added. PTI DP DRR