Bridging the Health–Retirement Divide: An Actuarial, Technological and Policy Evaluation of NPS Swasthya under the PFRDA Regulatory Sandbox, with International Lessons for Viksit Bharat 2047

Abstract

India is experiencing a demographic transition which is intertwined with an unresolved vulnerability in household finances. Herein lies the possibility of an unforeseen and a catastrophic out-of-pocket healthcare expenditure (43.9 % of India's current health expenditure (World Bank, 2025a)) that erodes retirement savings precisely when it is most required. PFRDA, acting under its Regulatory Sandbox framework, has attempted to navigate this conundrum with a novel approach with the introduction of NPS Swasthya Pension Scheme as a Proof of Concept. This pension scheme has for the first time, incorporated a health insurance component, which is financed via a partial withdrawal of pension savings and provides members with the ability to exit the scheme completely and pay the health benefits administrator for inpatient treatments and procedures that are above the partial withdrawal ceiling. Despite these innovations, the scheme requires a policy framework within which it can be assessed and a pathway can be established towards a potential scaling. This paper aims to address this gap with three key components. First, it offers a joint longevity–morbidity framework that describes the health-embedded contingency within the NPS Swasthya scheme. Second, it employs a Monte Carlo simulation to estimate corpus erosion and replacement ratio under a withdrawal take-up behavior. Third, it draws on the cross-country experience of Singapore’s MediSave, South Africa’s Two-Pot system and the Health Savings Architecture in the United States to a graduation pathway from Sandbox to scale and a permissioned-ledger deployment architecture compatible with the Digital Personal Data Protection Act, 2023, towards a pensioned society and the vision of Viksit Bharat 2047 and Pension for All @ 2047.