The National Pension System (NPS) Vatsalya scheme, designed to help parents and guardians build a long-term financial corpus for minor children, is seeing a sharp rise in participation. According to data from Aditya Birla Sun Life Pension Fund, the number of NPS Vatsalya account holders crossed four lakh by August 2026.
The scheme had around 2.15 lakh enrolled children by the end of March 2026, compared with approximately 1.07 lakh in March 2025. The increase reflects growing interest among parents in starting financial planning for their children at an early age.
Parents or legal guardians can open an NPS Vatsalya account in a minor’s name. The scheme requires a minimum contribution of Rs 250, while there is no upper limit on investment. Friends and relatives can also contribute to the account as gifts.
School-Age Children Make Up the Largest Share
Data from Aditya Birla Sun Life Pension Fund shows that school-aged children account for a significant portion of NPS Vatsalya subscribers.
Children aged 10 to 14 years represent 36.9% of subscribers, making this the largest age group. Those aged 5 to 9 account for 31.6%, while children between 15 and 19 years make up 21.1%. The youngest group, aged 0 to 4 years, represents 10.4% of subscribers.
Overall, children below 15 years account for 68.5% of NPS Vatsalya subscribers, highlighting the growing focus on starting long-term financial planning early.
How NPS Vatsalya Investments Work
NPS Vatsalya is a market-linked investment scheme, with returns depending on the investment plan and market performance. Different pension funds offer plans based on their respective investment strategies.
According to experts, some NPS Vatsalya investment choices can have up to 100% exposure to market-linked equity, depending on the plan selected. The scheme is intended for long-term investment, although partial withdrawals are permitted under specified conditions.
After completing three years, subscribers can withdraw up to 25% of the deposited amount for permitted purposes such as education, medical treatment or certain disabilities.
When the child turns 18, the account does not automatically end. It can continue until the child reaches 21 or can be converted into a regular NPS account in accordance with applicable regulations.
NPS Vatsalya vs PPF and Mutual Funds
NPS Vatsalya provides a long-term investment route specifically designed for children. Its market-linked structure differs from Public Provident Fund (PPF), which is government-backed and not linked to market performance.
Mutual funds, meanwhile, offer a wider range of investment choices and generally provide greater flexibility for withdrawals. The appropriate option depends on the investment period and the financial goal for which the money is being set aside.
The Pension Fund Regulatory and Development Authority (PFRDA) is also introducing a new framework aimed at making NPS schemes easier to compare. The framework is intended to provide clearer information on factors such as returns, fees, risks and asset allocation.
However, the introduction of a new classification does not by itself require investors to change their existing plans. According to Yadav of SBI Pension Funds, investors should consider their financial goals, investment horizon, risk appetite and the mix of asset classes before selecting a plan.
Technology Also Simplifying NPS Access
Pension fund companies are also using technology to make the NPS account-opening process simpler. Axis Pension Fund has focused on reducing the time required to open an NPS account and said that, in some cases, the process can be completed in around 15 to 20 seconds.
These efforts are aimed at making NPS easier for people to understand and access. With NPS Vatsalya, the long-term investment framework is also being extended to younger children, allowing parents and guardians to begin financial planning at an early stage.