NPS Swasthya Pension Scheme 2026: PFRDA Launches Health Pension to Cover Medical Costs After Retirement

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NPS Swasthya Pension Scheme 2026: To address the concerns of post-retirement medical expenses, pension fund regulator PFRDA has launched the NPS Health Pension Scheme, a revolutionary initiative. As of February 2026, the scheme is specifically designed for those who fear losing their savings due to hefty hospital bills in old age.

It is a voluntary, contribution-based scheme currently being implemented as a proof-of-concept (POC) under a regulatory sandbox framework to test its effectiveness and enable a larger-scale rollout in the future.

Scheme Functionality and Investment Structure

The NPS Health Pension Scheme operates under a multiple scheme framework, where the deposited funds are fully protected and invested in the market in accordance with existing investment regulations. The most important feature of this scheme is that the funds deposited in it can be used not only for indoor hospitalization, but also for outpatient treatment expenses such as OPD.

If an individual does not already have a regular NPS account, an account is automatically opened upon joining this scheme. There is no minimum or maximum investment limit, allowing individuals from all walks of life to contribute according to their financial capacity.

Fund Transfer Facility

To make this scheme flexible, the PFRDA has introduced a special fund transfer option under which individuals aged 40 years or above can transfer 30 percent of their total contribution from their regular NPS account to this health pension account.

However, it is important to note that this special fund transfer facility is currently not available to employees of the government and public sector undertakings and is primarily reserved for the private sector and general citizens. Withdrawal rules are quite liberal, allowing up to 25% of the deposit amount for treatment without any waiting period, but requiring a minimum balance of ₹50,000 for the first withdrawal.

NPS Investors
NPS

Critical Illness and Full Withdrawal

To ensure financial security during treatment, this plan offers special protection cover for critical illnesses. If the cost of treatment for a critical illness exceeds 70% of the total funds in your account, you can withdraw 100% of your account balance and exit the plan prematurely.

To ensure transparency in the payment process, all charges are clearly listed, eliminating any hidden costs. Furthermore, the withdrawal amount is sent directly to the authorized hospital or health benefit administrator, eliminating the hassle of cash payments during treatment.

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