PFRDA introduces NPS Swasthya scheme for medical expenses: Check eligibility, charges and claim rules

Contributions under the Scheme shall be invested by the PFs following the investment guidelines specified in the MSF

• NPS Swasthya Scheme allows pension savings for medical expenses.
• Partial withdrawals allowed for medical costs after Rs 50,000 corpus.
• Early exit allowed for critical treatment if costs exceed 70% of scheme funds.

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The NPS Swasthya Pension Scheme is a new initiative launched by the pension regulator, Pension Fund Regulatory and Development Authority (PFRDA), to assist individuals in covering medical expenses through their pension savings. It is initially being tested as a small pilot project within a special “sandbox” system.

The scheme connects health expenses with the National Pension System (NPS). People can save money and later use some of it for hospital and doctor bills. The goal is to make healthcare support simple, safe, and transparent for Indian citizens.

According to the PFRDA circular issued on January 27, 2026, "The NPS Swasthya Pension Scheme shall be introduced as a specific sector scheme under the NPS, intended exclusively to provide financial support for out-patient and in-patient medical expenses, within the framework of the Multiple Scheme Framework (‘MSF’). The Scheme shall be a contributory pension scheme, governed by the provisions of section 12(1)(a) and section 20 of the PFRDA Act and shall be offered to citizens of India on a voluntary basis."

The scheme will be launched by Pension Funds (‘PFs’), subject to prior approval from the Authority, strictly as a Proof of Concept, for a limited period. It will operate in a controlled environment under the Regulatory Sandbox Framework. PFs may also collaborate with FinTechs and other entities to carry out this Poc. For this PoC, provisions of PFRDA (Exits and Withdrawals under NPS) Regulations, 2015, have been relaxed under the Regulatory Sandbox Framework, in accordance with the PFRDA circular.

The circular states PFs must ensure all systems, intermediaries, and providers like CRA and HBA/TPA are ready before launch. They must disclose all key Scheme info—benefits, fees, claims, grievances, exit options transparently. PFs, with HBA, can add value-added features for subscribers.

The key details provided by PFRDA are

1. Eligibility: Any citizen of India can join the NPS Swasthya Pension Scheme. A Common Scheme Account must be opened along with the NPS Swasthya Pension Scheme Account if it is not already existing.

2. Charges: Fees and charges applicable under the Scheme shall be governed by the MSF and disclosed transparently. Such charges shall include those payable to the HBA, per the circular.

3. Contributions: Subscribers are allowed to contribute any amount to the NPS Swasthya Pension Scheme, following the current guidelines applicable to the Non-Government Sector under NPS.

4. Contributions under the Scheme shall be invested by the PFs following the investment guidelines specified in the MSF.

5. Transfer of Contributions from Common Scheme Account: Subscribers (excluding those under the Government Sector and Government-owned Corporates), aged above 40 years, shall be allowed to transfer up to 30% of their own and/or employee contributions from the Common Scheme Account to the NPS Swasthya Pension Scheme Account.

6. Partial Withdrawals for Medical Expenses: Subscribers are allowed to make partial withdrawals from their NPS Swasthya Pension Scheme Account to cover outpatient or inpatient medical costs as they arise. At any time, withdrawals can be made up to 25% of the subscriber’s own contributions to the Scheme, in line with the provisions of the PFRDA Act, 2013. There are no limits on the number of partial withdrawals, and no minimum waiting period is required, provided that the first partial withdrawal is only permitted after accumulating a minimum corpus of Rs 50,000 in the Scheme.

7. Premature Exit for Critical Medical Treatment: In the event of inpatient medical treatment where expenses in a single instance exceed 70% of the total corpus available in the subscriber’s NPS Swasthya Pension Scheme Account, the subscriber shall be allowed to make a premature exit with a 100% lump sum, regardless of the corpus size, solely for covering such medical expenses, per the circular.

8. Settlement of claims: Amounts withdrawn or exited shall be remitted directly to the concerned HBA/TPA, as applicable, based on valid claims and supporting invoices. Any remaining surplus after settling medical expenses shall be transferred to the subscriber’s Common Scheme Account.