PFRDA Introduces ‘NPS Swasthya Pension Scheme’

The Pension Fund Regulatory and Development Authority (PFRDA) has allowed the launch of the NPS Swasthya Pension Scheme as a Proof of Concept (PoC) under its Regulatory Sandbox Framework, marking a first attempt to integrate health-related benefits with India’s pension system.

What is the NPS Swasthya Pension Scheme?

• A sector-specific, voluntary, contributory pension scheme under the National Pension System (NPS)
• Designed to provide financial support for outpatient and inpatient medical expenses
• Operates under the Multiple Scheme Framework (MSF)
• Governed by the PFRDA Act, 2013

Key Objectives

• Test the operational, technological, and regulatory feasibility of linking pensions with healthcare spending
• Address rising out-of-pocket medical expenses
• Explore pension-based solutions to ageing and health-related vulnerabilities

Key Features of the Pilot Scheme

1. Regulatory Sandbox & PoC

• Implemented on a limited and controlled basis
• Pension Funds (PFs) must obtain prior PFRDA approval
• PFs may collaborate with:
  • FinTech firms
  • Health Benefit Administrators (HBAs)
  • Third-Party Administrators (TPAs)

2. Partial Withdrawals for Medical Needs

• Allowed for medical expenses
• Withdrawal cap:
  • Up to 25% of subscriber’s own contributions at any instance
• No limit on number of withdrawals
• Minimum corpus requirement: ₹50,000 before first withdrawal

3. Premature Exit for Critical Treatment

• In case of inpatient medical expenses exceeding 70% of total corpus in a single instance
• Subscriber permitted:
  • 100% lump-sum premature exit

4. Transfer from Existing NPS Accounts

• Subscribers above 40 years (excluding government employees) may:
  • Transfer up to 30% of their contributions
  • From existing NPS Tier-I account to Swasthya account

5. Exit Safeguards

• If PoC is found unviable:
  • Subscribers can transfer accumulated corpus back to the regular NPS account
  • Exit as per existing NPS rules