When planning for retirement, one of our biggest fears is the potential for illnesses in old age and their expensive treatments. Often, people accumulate pension funds, but a sudden medical emergency wipes out their entire savings. Keeping this problem in mind, the pension regulatory body, PFRDA (Pension Fund Regulatory and Development Authority), has taken a revolutionary step.

PFRDA recently introduced a new scheme called 'NPS Swasthya'. This scheme will operate within the framework of the National Pension System (NPS), but its primary objective is to provide subscribers with financial protection against health-related expenses. Let's find out how beneficial this scheme is for you and how it works.

What is 'NPS Health' Scheme?

NPS Health is a special pension plan launched by the Pension Fund Regulatory and Development Authority (PFRDA) as a pilot project under the "regulatory sandbox." This means it is currently being tested for a limited period of time and in a controlled environment. This plan is for individuals who wish to preserve a portion of their pension savings for future medical expenses (hospitalization or general treatment).

Key features and benefits of the plan

1. Fund Transfer Facility: If you are above 40 years of age, you can transfer up to 30 percent of your existing NPS account (common scheme account) to this new 'NPS Health' account. However, this facility is not currently available to government employees.

2. Easy Withdrawal for Treatment: The biggest advantage of this scheme is its flexibility. You can withdraw money from this account for OPD or IPD hospitalization expenses.

You can withdraw up to 25 percent of your total contribution.

There is no waiting period required for this.

The only condition is that you should have a minimum corpus of Rs 50,000 in your account.

3. 100% Withdrawal Option in Case of Critical Illness: If a subscriber is diagnosed with a critical illness whose treatment expenses exceed 70 per cent of his total corpus, he can opt for 'premature exit'. In such a situation, he can withdraw his entire corpus (100%) in lump sum for treatment.

4. Investment Pattern: The money deposited in this account will be invested by pension fund managers. Its investment rules and charges will be the same as those prescribed for other NPS schemes (MSF). This may also include Health Benefit Administrator (HBA) charges.

Who can join this scheme?

Any Indian citizen can join this scheme. A regular NPS account is mandatory. If you don't already have an NPS account, a regular account will be opened for you with 'NPS Health'.

Why is this scheme special?

NPS funds are typically locked up for a long period and difficult to withdraw. However, with NPS Health, the Pension Fund Regulatory and Development Authority (PFRDA) has combined pension and healthcare services. This not only provides you with the security of a regular income after retirement, but also provides immediate medical treatment funds if needed.