PFRDA launches NPS Swasthya Pension Scheme under regulatory sandbox

PFRDA has approved a pilot NPS Swasthya Pension Scheme under its regulatory sandbox to test health-linked benefits, allowing medical withdrawals and premature exits for treatment

The Pension Fund Regulatory and Development Authority (PFRDA) has permitted the introduction of the ‘NPS Swasthya Pension Scheme’ as a proof of concept (PoC) under its Regulatory Sandbox Framework, aimed at integrating health-related benefits within the National Pension System (NPS).

 

In a circular issued on Tuesday, the regulator said the pilot is intended to assess the operational, technological and regulatory feasibility of providing financial support for outpatient and inpatient medical expenses through a dedicated pension-linked scheme.

 

“With a view to examine the feasibility of integrating health-related benefit mechanisms with the existing NPS architecture… the authority has decided to permit the introduction of the NPS Swasthya Pension Scheme as a proof of concept on a limited and controlled basis,” PFRDA said.

 

 

The scheme will operate as a sector-specific scheme under the Multiple Scheme Framework (MSF) and will be offered to Indian citizens on a voluntary basis. It will be a contributory pension scheme, governed by the provisions of the PFRDA Act, 2013.

 

Under the pilot, pension funds (PFs) may launch the scheme after obtaining prior approval from the regulator and may collaborate with fintech firms and health benefit administrators (HBAs) or third-party administrators (TPAs). Certain provisions of the PFRDA (Exits and Withdrawals under NPS) Regulations, 2015, have been relaxed for the duration of the PoC.

 

Subscribers will be allowed to make partial withdrawals for medical expenses, with withdrawals capped at 25 per cent of their own contributions at any instance. Notably, there will be no restriction on the number of withdrawals, subject to a minimum accumulated corpus of Rs 50,000 before the first withdrawal.

 

The framework also provides for a full premature exit in cases of critical medical treatment.

 

“In case of inpatient medical treatment where medical expenses in a single instance exceed 70 per cent of the total corpus… the subscriber shall be permitted to undertake a premature exit with 100 per cent lump sum,” the circular said.

 

Additionally, subscribers above the age of 40 (excluding government sector subscribers) will be allowed to transfer up to 30 per cent of their contributions from their existing NPS common account to the Swasthya Pension Scheme account.

 

The pilot will be rolled out for a limited period with a restricted number of subscribers. If the scheme is found unviable after the PoC period, subscribers will be given the option to transfer their accumulated corpus back to the common NPS account and exit as per existing rules.