NPS Vatsalya Scheme : Children will now also get a pension
NPS Vatsalya Scheme : Finance Minister Nirmala Sitharaman said that a new pension plan named Vatsalya was unveiled on Tuesday at the general budget presentation. In Parliament, the Finance Minister said that parents and guardians will be able to make contributions to this pension plan. The 2024–25 budget was unveiled at that time. This plan can easily turned into a standard NPS account once the kid grows up. He said that the committee established to investigate NPS is moving quickly throughout this.
advantages provided by NPS
The NPS Vatsalya Yojana was created to inspire young people to begin saving and investing. Through this initiative, guardians or parents may create accounts for their young children and contribute to their retirement savings. This program is just an adaptation of the existing NPS account. But it’s been introduced for young people. Let us inform you that in March 2023, the government established a committee headed by Finance Secretary T V Somanathan with the objective of augmenting the advantages provided by NPS.
The National Pension System (NPS)
The National Pension System is an initiative of the government. It began in 2004. All Indian citizens are assisted under this strategy in obtaining a set monthly income upon retirement. Your post-retirement pension is based on the amount you put into it. Investments are made in corporate bonds, shares, and government assets under this system. NPS is governed by the Pension Fund Regulatory and Development Authority (PFRDA). Contributions to this plan are also tax deductible.
Crucial information
> First Tier 1 and second Tier 2 NPS accounts are the two distinct sorts. Withdrawals from the Primary Pension Account, Tier 1, are prohibited until age 60. A Tier 2 exists as well, akin to a savings account. Money may be deposited and taken out at any moment.
> Tax advantages are an additional advantage of saving under NPS. Investments made in NPS are tax-free under Section 80C. In addition, you qualify under Section 80CCD (1B) for an extra deduction of up to Rs 50,000. This tax deduction is only available under the previous tax system. Under the current tax structure, you may only claim a tax deduction under Section 80C.
> You have the flexibility to decide where to put your money when you invest in NPS. Corporate bonds, government securities, and stocks are examples of investment alternatives. Other than that, you have the option to choose the straightforward ‘Auto-choice Lifecycle Fund’ if you so want. Based on your age, the fund calculates the actual investment.
> NPS’s cost structure is well recognized. Because of this, it’s a popular long-term savings retirement plan. It costs around Rs 100 to start an NPS account. It charges between 0.5% and 0.05% each year. This is quite cheap in comparison to other market pension plans.
When you retire, you may use as little as 40% of your NPS corpus to purchase an annuity. An annuity with a set term provides a lifetime income stream. There are several varieties of annuity programs accessible.
