PFRDA Launches NPS Swasthya Scheme to Help Cover Medical Expenses

The Pension Fund Regulatory and Development Authority (PFRDA) has launched the NPS Swasthya Pension Scheme, a new initiative that allows individuals to save for medical expenses using the National Pension System (NPS).

The scheme is being introduced as a pilot project under a regulatory sandbox to test how pension savings can be used to meet healthcare needs.

Purpose of the Scheme

NPS Swasthya aims to link healthcare costs with retirement savings. Subscribers can build a medical corpus and use it for out-patient and in-patient medical expenses, making healthcare funding more structured and transparent.

Who Can Join the Scheme?

• Any Indian citizen is eligible to join
• A Common Scheme Account must be opened along with the NPS Swasthya Account, if not already available

The scheme is voluntary and open to individuals across sectors.

Contributions and Investments

Subscribers can invest any amount in the scheme, as per existing NPS rules for the non-government sector.

Contributions will be invested by pension funds in line with the Multiple Scheme Framework (MSF) investment guidelines.

Subscribers aged above 40 years (excluding government sector employees) can transfer up to 30% of their contributions from the Common Scheme Account into the NPS Swasthya Account.

Charges Under the Scheme

All fees and charges will be governed by the MSF and must be clearly disclosed by pension funds. This includes charges payable to healthcare benefit administrators (HBA) or third-party administrators (TPA).

Partial Withdrawals for Medical Expenses

• Partial withdrawals are allowed for out-patient and in-patient treatment
• Up to 25% of the subscriber’s own contributions can be withdrawn at a time
• No limit on the number of withdrawals
• No waiting period, but the first withdrawal is allowed only after a minimum corpus of ₹50,000 is built

Premature Exit for Critical Treatment

If medical expenses in a single hospitalisation exceed 70% of the total corpus, subscribers can make a full exit and withdraw 100% of the corpus as a lump sum to cover treatment costs.

How Claims Will Be Settled

Withdrawn amounts will be paid directly to the hospital or TPA based on valid bills and documents. Any remaining balance after medical expenses will be transferred back to the subscriber’s Common Scheme Account.

Conclusion

The NPS Swasthya Scheme is a step towards integrating healthcare needs with pension planning. With flexible withdrawals and special exit rules for critical illnesses, it offers a new way for individuals to manage medical costs through long-term savings.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a private recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.