NPS Vatsalya: What is the new pension scheme announced by FM Sitharaman? All you need to know

The government has proposed the NPS Vatsalya scheme, a new pension scheme that facilitates savings for minors. This scheme will allow parents and guardians to contribute on behalf of children.

In her Union Budget speech for 2024-25, Finance Minister Nirmala Sitharaman said, "NPS-Vatsalya, a plan for contribution by parents and guardians for minors will be started. On attaining the age of majority, the plan can be converted seamlessly into a normal NPS account."

After the minor attains adulthood, parents can convert the plan into a normal National Pension System (NPS) account.

NPS contribution limit for employers raised to 14% of employee's basic salary

In another development, Sitharaman increased the NPS contribution limit for employers in the private sector from 10% to 14% of the basic salary of employees. The limit has also been raised for the public sector. This development will only apply under the new tax regime.

"To improve social security benefits, deduction of expenditure by employers towards NPS is proposed to be increased from 10 to 14 per cent of the employee's salary," Finance Minister Nirmala Sitharaman said in her Budget speech.

Sitharaman also announced that the Committee to review the retirement savings scheme NPS has made considerable progress.

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 Union Minister said.