The National Pension Scheme Vatsalya, which was launched on September 18, allows Indians to invest in the government's pension scheme on behalf of their children. The scheme quickly gained momentum with the number of subscribers standing at 66,495 as of November 17, Minister of State for Finance Pankaj Chaudhary said.
With 9,219 accounts, Maharashtra has the maximum number of subscribers.
Andhra Pradesh and Karnataka follow closely with more than 6,500 subscribers each for the scheme. More than 1,000 accounts were opened in 18 states, according to state-wise data.
The union territory of Dadra & Nagar Haveli, along with Arunachal Pradesh saw the least subscription with 23 and 40 subscribers respectively. The union territories of Lakshadweep and Ladakh recorded less than five subscribers each.
Parents and guardians can make a minimum contribution of Rs 1,000. There is no upper limit. When the minor reaches the age of 18 years, the account is then converted into an NPS account.
The NPS has been a viable retirement option, and the new scheme was launched to widen the ambit to also include minors. The scheme allows complete withdrawal after the age of 18 years, but has certain restrictions based on the size of the corpus. A full withdrawal is only allowed if the corpus is equal to or less than Rs 2.5 lakh. If it is more than this amount, only 20% is withdrawable. The remainder must be invested in an annuity.
Despite the traction that NPS offers to Indian investors, the Vatsalya scheme has got its drawbacks. Experts highlight the lock-in period of the investment and the lack of liquidity.
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