What NPS Vatsalya is
NPS Vatsalya is the National Pension System for children below 18, launched in September 2024 and regulated by PFRDA. A parent or guardian opens and funds the account in the child's name; it can be opened through banks including SBI, post offices and the eNPS portal. When the child turns 18, it becomes a regular NPS account that they control.
Current rules (2026)
| Rule | Detail |
|---|---|
| Contribution | Minimum ₹250 a year (reduced in January 2026), no maximum |
| Investment | Default or chosen mix of equity, corporate bonds and government securities |
| Partial withdrawal before 18 | Allowed for education, serious illness or disability, within limits |
| At 18 | Converts to regular NPS; full withdrawal allowed if the corpus is ₹8 lakh or less |
| Tax benefit | Up to ₹50,000 under 80CCD(1B), old regime only, shared with the parent's own NPS limit |
Earlier articles mention a ₹1,000 minimum and a ₹2.5 lakh exit threshold; those were relaxed in January 2026.
What it could grow to
₹50,000 a year from age 3 to 18 (₹7.5 lakh in total), at an assumed 10%:
- At 18: about ₹17.5 lakh.
- Left untouched until 60 (no further contributions): about ₹9.6 crore, thanks to 42 more years of compounding.
Even ₹1,000 a month from birth grows to about ₹6 lakh by 18 at 10%, and about ₹3.3 crore by 60 if left alone. Returns are market-linked and not guaranteed.
Is NPS Vatsalya right for your child?
Strengths: very low cost, long-term equity exposure, a head start on retirement saving that is hard to replicate later, and a tax benefit for old-regime parents.
Limitations: the money is designed for retirement, not for college or marriage. Withdrawals before 18 are restricted, and at 18 a large corpus must largely stay in NPS. For education goals, the Sukanya Samriddhi Yojana (for daughters, 8.2%) or a mutual fund SIP is more flexible. Many families use NPS Vatsalya for a small long-term amount alongside those.
For your own retirement saving, see the NPS calculator.