Long term sustainability of the pension scheme is one of the major issues faced by the National Pension and Provident Fund (NPPF). NPPF manages the pension scheme of civil service, government owned corporations and the Armed Forces.
The National Pension and Provident Fund had more than 48 thousand members as of June this year. They receive about Nu.120 million contributions from the members monthly. There are more than 3,900 pensioners. NPPF pays about Nu.13 million to the pensioners every month.
The Chief Executive Officer of the NPPF, Dubthob Wangchug, said while they are working to ensure the pension schemes are sustainable, maintaining its long term sustainability is a big challenge.
“In terms of sustainability, the contribution is about 22 percent and we pay the benefit at the rate of 40 percent of the final pay. That is challenging because as the population ages, the pension becomes more unsustainable.”
Dubthob Wangchug also said they always have to get it reformed to make it more sustainable. “One issue relating to sustainability is always to generate the higher income. It is important because the more income we earn more sustainable the pension scheme”.
The NPPF therefore invest to maintain its sustainability in the long term. NPPF is an institutional investor. However, the CEO said in absence of the developed capital market, the government and Royal Monetary Authority have granted limited mandates to lend money. NPPF also provides loans to its members, which includes student, education and housing loans. But CEO said they had to suspend the housing loans. due to recent rupee shortage. The CEO said though they have huge funds, investment opportunities are limited.
“NPPF has investments in quite a lot of big projects that include investments in Dungsum cement project. We also have invested in Dagachu Hydro Project, “said the CEO. NPPF also finances TashiCell. “We are also looking at the future opportunities.”
The CEO said they will continue to look for investments. As part of the investments, NPPF has also been engaged in building residential houses and renting them to the members.
