India’s pension regulator has formalised the NPS Swasthya scheme, allowing subscribers to combine retirement savings with mandatory health coverage, including partial withdrawal options for medical expenses.
India’s pension regulator has moved the NPS Swasthya scheme from concept to formal rules, setting out how National Pension System subscribers can combine retirement saving with health cover. According to TV9 Hindi, the Pension Fund Regulatory and Development Authority has notified the final framework for the health-focused plan, which is meant to help members handle serious illness and medical emergencies without raiding retirement savings unnecessarily.
Under the new rules, enrolment in the insurance component is mandatory, while the pension account and policy remain legally and operationally separate. The framework creates two parts: an NPS Swasthya investment account and a super top-up health policy. PFRDA’s existing NPS withdrawal rules already allow limited access to own contributions in specified cases, but the new scheme is more tightly linked to medical spending and adds a dedicated health layer for subscribers and their families.
The key benefit is a partial withdrawal facility capped at 25% of eligible contributions for health-related expenses. PFRDA’s circular says payments for approved claims will be made directly to the hospital, health provider or another authorised institution rather than handed to the subscriber. The scheme also allows for premature exit in cases where inpatient medical costs are higher than what can be met through a partial withdrawal. The regulator has set out a family-floater structure covering the subscriber, spouse and up to two dependent children, with four deductible-and-cover combinations ranging from ₹1 lakh cover with a ₹10,000 deductible to ₹30 lakh cover with a ₹3 lakh deductible.
The contribution and renewal rules are designed to keep the plan active, but they also give the regulator room to close the health account if premiums are not paid. The minimum initial contribution includes the first year’s insurance premium, a ₹200 annual maintenance charge plus tax, and ₹1,000 for investment in the NPS Swasthya account. Later contributions can be as low as ₹10, while the fund management charge may be up to 0.08% a year, plus tax. If the balance is too low to renew the policy, the subscriber is to be warned 90, 60 and 30 days in advance where possible; if the cover still lapses, the account is closed and folded into the regular NPS “all citizen” model.
The insurer’s terms also impose waiting periods. There is a 30-day initial wait, apart from accidents covered under the policy terms, and a 12-month wait for pre-existing and certain specified conditions, subject to insurance law. Existing NPS money may be shifted into the new health account under the all citizen route, but only to the extent needed to meet the applicable deductible. PFRDA’s framework also says the health account can be closed on normal exit, premature exit, death, or if renewal funds are unavailable, without affecting any other NPS account the subscriber may hold.
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