NPS Swasthya gets closer to launch: Pension regulator to issue final guidelines soon

The Pension Funds Regulatory and Development Authority (PFRDA) is set to release the final operational guidelines for the NPS Swasthya pension scheme in the next few days. The scheme was introduced as a pilot project under the regulatory sandbox framework in January 2026.

NPS Swasthya is aimed at providing financial support to subscribers for outpatient and inpatient medical expenses.

“The proof of concept worked very well. We have had a very encouraging response. That has led us to finalise the product. In the next few days, we will be releasing the final guidelines,” PFRDA Chairperson S. Ramann said on Thursday.

The regulator is hopeful of formally launching the product within about 30 days of issuing the guidelines.

Under the proposed structure, pension funds will tie up with insurance companies to offer subscribers a top-up health insurance product.

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A top-up health insurance policy provides additional coverage once the expenses exceed a specified deductible. Typically, the policyholder first bears the deductible either out of pocket or through a basic health insurance plan, after which the top-up policy covers eligible expenses beyond that threshold. Because of the deductible, top-up plans are generally more affordable than comprehensive health insurance policies.

Under NPS Swasthya, in the event of hospitalisation, funds for eligible medical expenses will be released from the subscriber’s pension account, with any expenses above the specified limit covered by the top-up insurance policy.

The pension fund will be the master policyholder and will be responsible for designing the most suitable bundled product for subscribers, Ramann said while speaking on the sidelines of the Global Fintech Fest in Mumbai.

PFRDA explores guaranteed-return NPS products

Separately, PFRDA is exploring the possibility of launching guaranteed-return products under the National Pension System (NPS). Earlier this year, the pension regulator constituted a high-level committee to examine assured payouts.

PFRDA already regulates the Unified Pension Scheme (UPS), a government-backed pension product that provides assured benefits to eligible central government employees. However, the key challenge in developing a similar guaranteed product for non-government employees is determining who would provide and back the guarantee.

“In the UPS that the government has created for government employees, there is a built-in guaranteed mechanism. Now the most difficult part is who is going to provide that guarantee when we create this kind of a pension product for the non-government sector. That is really where we are working with the expert body,” Ramann said.

According to Ramann, PFRDA is evaluating multiple products that could eventually pave the way for a guaranteed return offering.

“Right now, we have come up with a retirement income scheme, which is not a guaranteed product, but which increases the pool or my corpus available during my retirement years. Between 60 and 80 years, I can look forward to having a better corpus because that money is deployed more efficiently. I can then draw it down on a monthly basis, but it does not take away from the fact that annuity is still important,” he said.

The pension regulator is also looking at innovative bond issuances that could help provide inflation-protected outcomes, Ramann said.