Smart Savings for Your Child's Future: Comparing NPS Vatsalya, Sukanya Samriddhi Yojana, and PPF

When it comes to securing a child’s financial future, parents today have several reliable government-backed investment options. Among them, the NPS Vatsalya Scheme, Sukanya Samriddhi Yojana (SSY), and the Public Provident Fund (PPF) stand out as popular and trusted choices. Each of these plans serves a different purpose and offers unique benefits based on an investor’s financial goals, risk appetite, and the child’s future needs.

NPS Vatsalya: Long-Term Growth with Market-Linked Returns

The National Pension System (NPS) Vatsalya is a relatively new initiative designed for children below 18 years of age. Unlike traditional savings schemes, NPS Vatsalya invests in a diversified mix of equity, corporate debt, and government securities, which can yield average annual returns between 9.5% and 10%.

The biggest advantage of this plan lies in the power of compound growth, as returns are reinvested over the long term. This allows parents to build a substantial corpus for their child’s higher education or long-term goals such as retirement savings.

NPS Vatsalya also provides partial withdrawal flexibility — up to 25% of the corpus can be withdrawn after three years to cover education or medical emergencies. Additionally, it offers dual tax benefits: a deduction under Section 80C (up to ₹1.5 lakh) and an additional ₹50,000 under Section 80CCD(1B), making it one of the most tax-efficient investment options for families planning long-term savings.

However, since it is a market-linked plan, investors must be prepared for moderate risk. Returns are not guaranteed and can fluctuate depending on market performance, making it more suitable for those comfortable with a long-term investment horizon.

Sukanya Samriddhi Yojana: Guaranteed Savings for a Girl Child

The Sukanya Samriddhi Yojana (SSY), launched under the Beti Bachao Beti Padhao initiative, is a government-backed small savings scheme exclusively designed for girl children. It offers an assured interest rate of 8.2% per annum, which is completely tax-free.

Parents or guardians can open this account in the name of a girl child below the age of 10 and deposit up to ₹1.5 lakh annually. The maturity period extends until the girl turns 21 or gets married after 18, whichever comes earlier. Additionally, 50% of the balance can be withdrawn after the girl turns 18 to meet educational expenses, making it ideal for higher education planning.

While SSY offers security and guaranteed returns, it is less liquid compared to NPS Vatsalya, meaning investors cannot withdraw funds easily before maturity. However, its zero-risk and tax-free status make it one of the safest and most rewarding savings schemes for parents of daughters.

Public Provident Fund (PPF): Safe and Steady Growth

The Public Provident Fund (PPF) is another long-trusted investment avenue that can also be opened in a minor’s name. It comes with a 15-year lock-in period and currently offers an interest rate of 7.1% per annum. PPF is known for its capital safety, tax-free returns, and EEE (Exempt-Exempt-Exempt) tax status — meaning the investment, interest, and maturity amount are all exempt from tax.

It suits conservative investors who prefer stable, long-term returns without exposure to market volatility. PPF can also serve as a secondary savings tool alongside other high-return instruments like NPS or SSY.

Which Plan Should You Choose?

Each of these three schemes has its own strengths.

• Choose NPS Vatsalya if you’re aiming for long-term growth and can handle market-linked risks. It’s ideal for building a substantial corpus through compounding.

• Opt for Sukanya Samriddhi Yojana if you have a girl child and want guaranteed, tax-free returns for education or marriage.

• Go with PPF if you prefer safety, stability, and assured returns with tax benefits.

Many families today even combine these plans — using PPF for stability, SSY for guaranteed returns, and NPS Vatsalya for long-term growth — to create a well-balanced financial foundation for their children.

Ultimately, the best plan depends on your risk tolerance, financial goals, and time horizon. Whether you prefer guaranteed safety or aim for higher market-linked returns, these three government-backed schemes together offer a solid roadmap to secure your child’s future.