The biggest worries of old age are illness and bills. Pension regulator PFRDA is working on a scheme that can free your retirement from the fear of ‘sickness and bills’. It has been named Health Initiative. Now your NPS investment will become not just a retirement fund but also a medical pension pool.
What is this new medical pension model?
PFRDA says that now NPS will not be just a retirement fund. The three big fund managers, ICICI, Axis and Tata, are experimenting with products that will bundle pension with health insurance. Under the new scheme, an investor will be able to set aside 30% of his pension savings exclusively for future medical expenses. That means this money will be dedicated only and only for the treatment of your old age.
Total NPS fund distribution
70% share: For regular monthly pension.
30% share: For dedicated medical pension pool.
Advantage: No need to touch your original savings for medical treatment after retirement.
Bargaining power will increase
NPS currently has a base of around 1 crore subscribers. When so many people approach an insurance company or hospital together, fund managers will be able to ‘negotiate’ for better deals.
Cheap Top-up: Health insurance top-up at below market rates.
Hospital Deals: This will also be a beneficial deal for hospitals because they will not have to wait for months like CGHS, the money will be received immediately after the treatment. In return they will provide discounts and better facilities to the patients.
Not just health, keep an eye on returns too
In times of inflation, just saving money is not enough, it is also necessary to increase it. PFRDA no longer wants to limit your money to government bonds only. The regulator is now allowing investments up to 5% in real estate, project finance and Alternative Investment Funds (AIFs). Now Gold and Silver ETFs can also contribute up to 1% of your old age capital.
old vs new system
Feature Existing System Proposed ‘Health’ Initiative
Focus only on Retirement Corpus Pension + Health Protection
Insurance premium From own pocket (expensive) Negotiated by fund (cheaper)
Awaiting hospital bill reimbursement, immediate payment to hospitals
Investment Basket including Debt and Equity AIF, Real Estate and Gold
Do you know the date?
ipo listing
26 February: PNGS Reva Diamond Jewelery Ltd (380 crores)
February 27: Gaudium IVF (Rs 165 crore)
March 2: Cleanmax enviro (Rs 3100 crore), Shree Ram Twistex (Rs 110 crore)
Quarterly results of companies
February 24: Schaeffler India Ltd
February 25: Tata Motors, LG Elect., ICICI Prudential, Meesho
February 26: Sanofi India
February 27: Rain Industries
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