NPS Health Pension Scheme: The biggest concerns of old age are twofold: regular income and sudden, hefty medical bills. Pension regulator PFRDA has now found a single solution to both these concerns, called the NPS Health Pension Scheme.
1`As of 2026, National Pension System investors will be able to set aside a portion of their pension savings specifically for medical expenses, such as hospitalization or outpatient department bills. This scheme will save you from having to beg others in times of illness and provide a strong safety net for treatment.
What is the NPS Health Pension Scheme
Launched by the Pension Fund Regulatory and Development Authority (PFRDA), this scheme operates under the Multiple Scheme Framework (MSF). It is a contributory and voluntary pension scheme, which means that any Indian citizen can choose to join it at their own will.
Currently, it is being tested as a pilot project, so that, based on its success, it can be made more effective in the future. It is a panacea for those who do not want to waste their hard-earned money on hospital bills after retirement and want to live a dignified life.
Eligibility and Fund Transfer Rules
Any Indian citizen can avail themselves of the benefits of this scheme. If you do not already have a ‘Common Scheme Account’, it is mandatory to open one along with a health account. The most important aspect of this scheme is the fund transfer facility. According to PFRDA rules, investors above 40 years of age have a special right.
They can transfer 30% of their or their employer’s contribution from their main pension account to the ‘NPS Health Account’. However, it is important to note that government employees and those working in government companies will not currently be able to avail themselves of this fund transfer facility.
When and how much money can be withdrawn
The NPS Health Account is designed to provide immediate financial assistance when needed. You can make partial withdrawals from this account for medical expenses, whether it’s a small outpatient department expense or a large hospitalization bill. The rules are quite flexible:
- You can withdraw up to 25% of your total investment at any time.
- The first withdrawal is available only when you have a minimum balance of ₹50,000 in your account.
- There is no waiting period for withdrawals under this scheme, nor are there any strict restrictions on the number of withdrawals, so investors don’t have to struggle in difficult times.
100% Refund in Case of Critical Illness
If an investor develops a critical illness that requires very expensive treatment, the PFRDA has opened a special route for premature exit. If the medical bill exceeds 70% of the total amount deposited in your ‘NPS Health Account’, you will be allowed to prematurely exit the scheme and withdraw 100% of your entire funds. This powerful provision ensures that your entire deposit is used to protect your life in times of crisis, and you do not face financial hardship.
Fees and Transparent Charges
The fees levied under this scheme will be fully compliant with the Multiple Scheme Framework (MSF) regulations. The PFRDA has clarified that all fees charged to investors will be transparently dsclosed. These charges will also include fees paid to the Health Benefit Administrator (HBA), who manages your claims and treatment process. Subscribers can deposit any amount into this account as per their capacity, making it an excellent option even for small investors.