Finance Minister Nirmala Sitharaman suggested a new pension program for minors dubbed 'Vatsalya' in the Union Budget 2024-25, which was presented to Parliament on July 23, 2024. Parents and guardians can make contributions to a contributory pension program. When the minor reaches the age of majority, the plan can be converted to a standard Nation Pension System account.
The 'Vatsalya' Scheme was Announced in the Budget 2024
The NPS Vatsalya scheme is ideal for long-term financial planning for children. It is similar to the existing NPS in that employees can create a retirement corpus by making regular payments to the fund. NPS payments are invested in market-linked securities like equities and bonds. As a result, it has the potential to generate larger long-term returns than standard fixed-income investments.
The Union Minister further stated that the committee reviewing the NPS had made significant headway in its work. She was pleased that the Staff Side of the National Council of the Joint Consultative Machinery for Central Government Employees had adopted a constructive approach.
"A solution will be developed that addresses the relevant issues while remaining fiscally prudent to protect ordinary citizens," the Minister stated in her Budget speech. Last year, the Finance Ministry organized a committee to assess the pension scheme for government employees and make necessary adjustments, taking into consideration the current framework.
Under the previous pension program, a government employee was entitled to a monthly pension upon retirement. Employees under the new pension scheme contribute a percentage of their salaries to the pension fund. The former pension scheme expired in December 2003, and the new program went into effect on April 1, 2004.
