The Pension Fund Regulatory and Development Authority (PFRDA) has launched the NPS Swasthya Pension Scheme, a pilot initiative aimed at helping citizens build a separate corpus for medical needs alongside retirement savings.
Introduced on a proof-of-concept basis, the scheme is designed to cover both out-patient (OPD) and in-patient medical expenses. It is a voluntary and contributory scheme under the National Pension System (NPS) and allows withdrawals for medical purposes once a minimum corpus is built.
Under this scheme, contributions made by subscribers are invested as per existing NPS investment guidelines. Unlike regular NPS withdrawals, NPS Swasthya allows flexible access to funds specifically for healthcare needs, linking long-term savings with rising medical costs.
How the scheme works
The NPS Swasthya Pension Scheme will operate as a sector-specific scheme under NPS within the Multiple Scheme Framework (MSF). It will be governed by provisions of the PFRDA Act and offered voluntarily to Indian citizens.
Initially, pension funds will roll out the scheme in a controlled regulatory sandbox environment, with a limited number of subscribers. Pension Funds may also collaborate with fintech firms and health service administrators for implementation. If the pilot fails to establish viability, subscribers will be allowed to transfer their accumulated corpus back to their regular NPS account and exit as per existing rules.
Pension Funds are required to disclose all key details clearly, including benefits, fees, claim processes, grievance handling and exit provisions.
Eligibility
Any Indian citizen can join the NPS Swasthya Pension Scheme. Subscribers must also have a Common Scheme Account under NPS. If one does not exist, it will be opened mandatorily.
Fees and charges
All applicable fees, including charges payable to Health Benefit Administrators (HBA) or Third-Party Administrators (TPA), will be governed by the MSF and disclosed transparently.
Contributions and investments
Subscribers can contribute any amount, as per NPS rules applicable to the non-government sector. Contributions will be invested by Pension Funds in line with MSF investment guidelines.
Subscribers aged above 40 years (excluding government sector subscribers) can transfer up to 30% of their self or employee contributions from their Common Scheme Account to the NPS Swasthya account.
Withdrawals for medical expenses
Partial withdrawals are allowed for both OPD and hospitalisation expenses. At any point, subscribers can withdraw up to 25% of their own contributions. There is no limit on the number of withdrawals, and no waiting period applies, once a minimum corpus of ₹50,000 is accumulated.
Premature exit for critical illness
If medical expenses in a single hospitalisation exceed 70% of the total corpus, the subscriber can opt for a premature exit with 100% lump-sum withdrawal, irrespective of corpus size, strictly for meeting medical costs.
Claim settlement and exit rules
Withdrawn amounts will be paid directly to the HBA, TPA or hospital, based on valid claims and invoices. Any surplus amount after settling medical expenses will be transferred back to the subscriber’s Common Scheme Account.
In all other cases, standard NPS exit rules for All Citizens will apply after transferring funds to the Common Scheme Account.
Grievance redressal and data consent
Pension Funds, along with HBAs or TPAs, will set up a grievance redressal system. Pension Funds will be responsible for resolving complaints, while Central Recordkeeping Agencies (CRAs) will support servicing.
For claim processing, subscriber data may be shared with hospitals or administrators. Explicit digital consent will be obtained from subscribers, in line with the Digital Personal Data Protection Act, 2023.