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Pension Fund Regulatory and Development Authority (PFRDA) | Central Recordkeeping Agency (CRA)
The Pension Fund Regulatory and Development Authority (PFRDA) has notified the launch of the ‘NPS Swasthya Pension Scheme’ as a Proof of Concept (PoC) under its Regulatory Sandbox Framework. This innovative sector-specific scheme is designed to integrate health-related financial support with the existing National Pension System (NPS) architecture. It allows Indian citizens to voluntarily contribute toward a dedicated fund intended exclusively for out-patient (OPD) and in-patient (IPD) medical expenses. The PoC will be managed by Pension Funds (PFs) in collaboration with FinTechs and Health Benefit Administrators (HBAs) to test operational and technological feasibility.
Contribution and Fund Management Mechanics
The scheme operates under a contributory model where subscribers can transfer a portion of their existing savings or make fresh contributions:
Corpus Transfers: Subscribers over 40 years of age (excluding Government sector employees) can transfer up to 30% of their self or employee contributions from their Common Scheme Account to the Swasthya Account.
Investment Strategy: Contributions will be managed by PFs according to Multiple Scheme Framework (MSF) investment guidelines.
Mandatory Dual Accounts: Every subscriber must hold a Common Scheme Account alongside the Swasthya Pension Scheme Account.
Withdrawal and Claim Settlement Protocols
To ensure liquidity for medical emergencies, the PFRDA has relaxed standard exit regulations for this PoC:
Partial Withdrawals: Subscribers can withdraw up to 25% of their own contributions for medical needs once the corpus reaches a minimum of ₹50,000. There is no minimum waiting period or limit on the number of withdrawals.
Premature Exit: If a single medical instance exceeds 70% of the Swasthya corpus, a 100% lump sum exit is permitted for treatment.
Direct Settlement: Payments are remitted directly to the HBA, TPA, or hospital based on valid invoices, with any surplus returning to the subscriber’s Common Scheme Account.
What is a “Regulatory Sandbox Framework” in the context of pension reforms? A Regulatory Sandbox is a controlled environment that allows the PFRDA to permit live, limited-scale testing of new products or innovations—like the Swasthya Pension Scheme—by relaxing certain regulatory requirements. This enables the Authority to assess the viability, risks, and technological readiness of a product before considering a full-scale national rollout.
Policy Relevance
The introduction of the NPS Swasthya Pension Scheme represents a strategic shift toward multi-purpose pension accounts in India.
Financial Protection against Medical Inflation: By allowing systematic accumulation for healthcare, the policy reduces out-of-pocket expenditure (OOPE), which is a leading cause of poverty among the elderly.
Regulatory Innovation: Using a Sandbox approach allows the PFRDA to gather empirical data on subscriber behavior and institutional readiness without disrupting the core pension system.
Data Privacy Integration: The mandatory use of explicit digital consent aligns the pension sector with the Digital Personal Data Protection Act 2023, setting a benchmark for secure financial-health data sharing.
Relevant Question for Policy Stakeholders: How can the PFRDA ensure seamless interoperability between different Health Benefit Administrators and Pension Funds to prevent delays in direct-to-hospital claim settlements?
Follow the full news here: Introduction of ‘NPS Swasthya Pension Scheme’ as a Proof of Concept under the Regulatory Sandbox Framework