Do you need NPS Vatsalya?

NPS Vatsalya is the newest addition to child investment plans. A variant of the NPS (National Pension System), it allows parents to open an account in their child's name. The structure is similar to a standard NPS Tier-1 account, with the funds remaining locked until the child reaches 60. This is a key advantage of NPS Vatsalya, as it gives you ample time to reap the maximum rewards of compounding. For example, if you as a parent start contributing Rs 500 each month from the time your child is five, the corpus would hit Rs 5 lakh by the time they are 25. This amount will top Rs 32.5 lakh by 40, and Rs 3.6 crore in your child's 60th year. This is, of course, assuming the investment annually grows 12 per cent.