The Cabinet has approved an extension of the required service period for government employees to qualify for lump-sum pension withdrawals, raising it from 20 to 23 years. The finance ministry has been instructed to implement this change immediately and comprehensively review existing pension rules and regulations. The Royal Civil Service Commission proposed a revision to the pension rules in August this year.
Under the current system, government employees become eligible for a pension after 20 years of service, provided they retire as per civil service rules.
The National Pension and Provident Fund offers two types of benefits: pension and provident fund.
A pension provides monthly income to qualified members who have contributed for at least 10 years and have retired at the designated retirement age.
In contrast, the provident fund is a one-time lump-sum payment including total contributions and accumulated earnings.
At present, employees who exceed 20 years of service are only eligible for the provident fund upon retirement, and they receive the pension as a monthly payment.
However, those who retire before reaching 20 years of service are entitled to both pension and provident fund amounts.
With the new extension from 20 to 23 years, civil servants will now have an additional three years to contribute to their pension fund, which could result in a larger accumulation in their retirement accounts.
This change could also encourage employees to remain in service for a longer period.
The National Pension and Provident Fund has yet to comment on the policy change as they have not received official correspondence from the finance ministry.
Samten Dolkar
Edited by Sherub Dorji
