NPS Swasthya Pension Scheme
Kartavya Desk Staff
Source: TOI
Subject: Economy
Context: The Pension Fund Regulatory and Development Authority (PFRDA) has launched the NPS Swasthya Pension Scheme as a pilot project under its Regulatory Sandbox Framework to integrate healthcare expense coverage with pension savings.
About NPS Swasthya Pension Scheme:
What is the NPS Swasthya Pension Scheme?
• The NPS Swasthya Pension Scheme is a sector-specific scheme under the National Pension System (NPS) designed to provide financial support for medical expenses—both outpatient (OPD) and inpatient (IPD)—using pension-linked savings.
• It is being introduced as a Proof of Concept (PoC) on a limited scale under PFRDA’s Regulatory Sandbox, allowing controlled experimentation before any full-scale rollout.
Nodal Authority: The Pension Fund Regulatory and Development Authority (PFRDA).
Aim of the scheme:
• Integrate healthcare financing with long-term retirement planning
• Reduce out-of-pocket expenditure (OOPE) on medical care
• Test the operational, technological, and regulatory feasibility of health-linked pension products
• Enhance subscriber-centric innovation within the NPS ecosystem
Key features of the NPS Swasthya Pension Scheme:
• Voluntary & contributory: Open to all Indian citizens on a voluntary basis, with flexible contribution amounts.
• Multiple Scheme Framework (MSF): Contributions are invested as per MSF guidelines, ensuring regulated asset allocation.
• Medical expense withdrawals: Partial withdrawals allowed for OPD and IPD expenses Up to 25% of subscriber’s own contributions can be withdrawn No cap on the number of withdrawals First withdrawal allowed after a minimum corpus of ₹50,000
• Partial withdrawals allowed for OPD and IPD expenses
• Up to 25% of subscriber’s own contributions can be withdrawn
• No cap on the number of withdrawals
• First withdrawal allowed after a minimum corpus of ₹50,000
• Critical illness protection: If a single inpatient treatment exceeds 70% of total corpus, Subscriber can exit prematurely with 100% lump-sum withdrawal exclusively for medical treatment
• If a single inpatient treatment exceeds 70% of total corpus,
• Transfer from Common Scheme Account: Subscribers above 40 years (excluding government sector) can transfer up to 30% of their contributions into the Swasthya Scheme.
• Claim settlement mechanism: Medical claims are paid directly to HBA/TPA or hospitals Any surplus after settlement is credited back to the subscriber’s NPS account.
• Medical claims are paid directly to HBA/TPA or hospitals
• Any surplus after settlement is credited back to the subscriber’s NPS account.
• Strong governance safeguards: Mandatory disclosures on benefits, fees, claims, exits Robust grievance redressal mechanism Explicit digital consent as per the Digital Personal Data Protection Act, 2023
• Mandatory disclosures on benefits, fees, claims, exits
• Robust grievance redressal mechanism
• Explicit digital consent as per the Digital Personal Data Protection Act, 2023
Significance of the scheme:
• Health–Pension convergence: First structured attempt to link retirement savings with healthcare financing in India.
• Reduced medical impoverishment: Helps households manage health shocks without liquidating assets.