New pension scheme ‘Vatsalya’ announced for minors; parents, guardians to contribute

NEW DELHI: A new pension scheme for minors, named ‘Vatsalya’, has been proposed by Union Finance Minister Nirmala Sitharaman in the Union Budget 2024-25 which was presented in Parliament on Tuesday.

A contributory pension scheme, this will have contributions by parents and guardians. On attaining majority, the plan can be converted seamlessly into a normal National Pension System account. The Union Minister also announced that the committee to review the NPS has made considerable progress in its work.

She expressed satisfaction that the staff side of the National Council of the Joint Consultative Machinery for central government employees have taken a constructive approach. “A solution will be evolved which addresses the relevant issues while maintaining fiscal prudence to protect the common citizens”, the minister said in her Budget speech.

Last year, the Finance Ministry formed a committee to evaluate the pension scheme for government employees and suggest necessary changes, taking into account the current framework and structure of the National Pension System (NPS).

Under the old pension scheme (OPS), a government employee is entitled to a monthly pension after retirement. Under the new pension scheme, employees contribute a portion of their salaries to the pension fund. The old pension scheme was discontinued in December 2003, and the new pension scheme came into effect on April 1, 2004. (ANI)