National Council members called for stronger efforts to increase private sector participation in the pension and provident fund schemes. Members say the coverage remains critically low today, despite the sector’s growing contribution to the economy. According to the Good Governance Committee’s review report, only around 20 per cent of the private sector workforce is covered under the pension and provident fund scheme.
During deliberations on the review report of the National Pension and Provident Fund, several National Council members raised concerns over the limited inclusion of private employees in the retirement scheme.
Tshering Tshomo, Zhemgang’s Member of Parliament, said, “Private employees who are currently not part of the scheme should be provided stronger support and protection mechanisms so they can also benefit from retirement schemes like government employees.”
“We all know how important the private sector is. To strengthen the sector, we must ensure employees feel secure and valued at their workplace. Protection schemes such as these are essential to encourage long-term employment in the private sector,” added Birendra Chimoria, Member of Parliament from Dagana.
The report revealed that of the nearly 1,30,000 private sector employees in the country, only around 26,000 are currently enrolled in the pension and provident fund system.
According to the Labour and Employment Act 2007, all enterprises employing five or more employees are required to provide a mandatory PF of five per cent to each employee’s monthly basic salary.
However, the Good Governance Committee said, many employers do not comply.
“A retirement scheme requires contributions from both employees and employers. The Act mandates the employer contribution, those who fail to comply are liable for penalties,” said Kencho Tshering, Chairperson of the Good Governance Committee.
“Private sector participation had previously exceeded 26,000 members. However, during the Covid19 pandemic, many withdrew from the scheme due to financial instability and have not been able to rejoin,” added Phuntsho Rapten, a member of the Good Governance Committee.
Members added that a large portion of the private workforce could face financial insecurity after retirement, if their participation does not increase.
The Good Governance Committee has therefore recommended measures to expand coverage within the private sector.
The committee proposed including the industry, commerce and employment ministry as members of the national pension board to represent the private sector employees.
The report will be adopted on the 15th of next month.
Deki Lhazom
Edited by Phub Gyem
