New Delhi, April 27 -- Parents looking to build a financial cushion for their children have multiple government-backed options to choose from, including NPS Vatsalya and the Sukanya Samriddhi Yojana (SSY). Both schemes are designed to promote long-term savings, but they differ in structure, eligibility, returns and tax treatment.

Sukanya Samriddhi Yojana is a fixed-income savings scheme limited to girl children. It offers an interest rate of 8.2% per annum and can be opened for any female child until she turns 10. The scheme offers to provide financial security to a girl child and comes with tax benefits.

NPS Vatsalya, on the other hand, is a market-linked pension scheme for minors that invests in a mix of equity and debt instruments, w...