NPS Vatsalya: returns so far, and what happens at 18

A children's NPS with its own schemes

NPS Vatsalya is the National Pension System account a parent or guardian opens for a child under 18. It was launched in September 2024. On 7 January 2026 PFRDA issued the NPS Vatsalya Scheme Guidelines 2025 to replace the original rules. They make it a scheme of its own: each pension fund runs a dedicated Vatsalya scheme, and existing accounts are to be moved into it under their current pension fund.

NPS Trust's NAVs for these schemes start on 23 January 2026, at ₹10, for all ten pension funds. That gives eight and a half months of data to 8 October 2026, NPS Trust's latest NAV date. It is too short to judge a manager. It is enough to see how the new schemes behave.

What the rules say they hold

The guidelines set indicative limits for every pension fund's Vatsalya scheme:

Within those ranges each fund picks its own mix, which PFRDA says is meant to differentiate their performance. So unlike a Tier I account, where the subscriber chooses between Schemes E, C and G or an Auto Choice life-cycle fund, a Vatsalya account holds one balanced scheme, and the only investment choice is the pension fund. At least half of it is in shares.

Returns since launch

Absolute returns on the POP variant, 23 January to 8 October 2026.

Every Vatsalya scheme is below its launch price. The falls run from 4.72% at LIC to 8.31% at Kotak Mahindra, with a median of 6.27%. Over the same dates the Nifty 50 fell 11.25%, from 25,048.65 to 22,231.80 (see the Nifty valuation page), while the same ten managers' Scheme C gained 2.74% to 3.36% and Scheme G 1.17% to 1.85%. A portfolio that is at least half equity was always going to lose money in that market.

But most fell more than their own building blocks suggest. Take each manager's own Scheme E and its two bond schemes and mix them at 75% equity, the most the rules allow. That mix would have lost less than the actual Vatsalya scheme at eight of the ten managers. At SBI the blend works out to about −3.9% against an actual −5.40%, and Aditya Birla Sun Life's Vatsalya scheme fell further than its pure equity scheme. Only LIC and Tata did better than the blend. The data cannot say why. The Vatsalya schemes may hold different shares from Scheme E, or may have invested the money moved across from old accounts at different times.

The online variant is slightly ahead. Since 1 April 2026 the POP variant, for accounts opened through a bank or other point of presence, carries its charges in the NAV. The Direct variant for e-NPS accounts was 0.18% higher at every one of the ten managers on 8 October.

What happens at 18

The guidelines give the child a three-year window, from 18 to 21:

1. Fresh KYC first. The account stays invested, but no withdrawal is allowed until the now-adult subscriber completes KYC and names nominees.
2. Then one of three choices. Move the whole corpus into the regular NPS, the All Citizen model, after which its normal rules apply (how the NPS works covers them). Or take up to 80% as a lump sum and use the rest to buy an annuity. Or, if the corpus is less than ₹8 lakh, take all of it.
3. No choice by 21? The account is moved to the pension fund's high-risk variant, the one with more equity, under the Multiple Scheme Framework, and the Vatsalya exit options lapse.

Whether ₹8 lakh is a high bar depends on the contributions. At an assumed 8% a year, which is an assumption and not a forecast, ₹10,000 paid at the start of each year from birth grows to about ₹4.04 lakh by 18, under the threshold, while ₹25,000 a year grows to about ₹10.11 lakh, over it. The NPS calculator runs the same arithmetic at a rate you choose.

Before 18: what you can take out

Partial withdrawals are allowed after three years in the scheme, for the child's education, treatment of specified illnesses, or a disability of more than 75%. The limit is 25% of contributions, excluding returns, and there can be at most two before 18 and two more between 18 and 21. A family that has paid in ₹25,000 a year for ten years, ₹2.5 lakh in all, can withdraw at most ₹62,500, however much the account has grown. If the child dies, the whole corpus goes to the guardian, nominee or legal heirs.

The minimum contribution is ₹250 at opening and ₹250 a year, and relatives and friends can contribute too.

Where it fits

NPS Vatsalya is a pension product that starts early. Its money is meant to stay invested well past 18, and the exit at 18 comes with an annuity unless the corpus is small. For a goal the child will need at 18, such as college fees, it is the wrong tool on its own. Our guide to investing for a child's education covers the alternatives, among them Sukanya Samriddhi for a daughter and the children's funds we compared in three kinds of children's fund.

What this does not tell you

Eight and a half months, in a falling equity market, is not a track record. The ranking above will change, and it says nothing yet about the next ten years. These are POP-variant returns; charges taken by cancelling units are not in the NAV. The rules here are PFRDA's guidelines as issued in January 2026; check the current version with your pension fund or NPS Trust before acting. None of this is a recommendation of any pension fund or scheme.