After more than two decades of operating under an executive order, the country’s pension system is set to get a legal backbone. The National Assembly today agreed to enact a Pension Act within a year. This aims to address gaps in governance, management and regulation of funds by the National Pension and Provident Fund, which currently operates without full autonomy or an Act.
The Good Governance Committee of the National Assembly said a draft pension policy had been submitted to the government in 2018. However, no concrete progress has been made since then.
The committee also presented challenges faced by the NPPF, including members resigning before enrolling in the pension scheme due to its limited benefits, lack of investment options in the domestic market and a rapidly growing ageing population.
Further, the committee presented its survey findings, which involved 232 respondents who are members of the pension scheme and retirees.
“98.7 per cent of the respondents said the pension amount they receive is not sufficient at all. 74.1 per cent stated that the pension system does not provide social security and protection, and 84.1 per cent pointed out that the lack of a Pension Act creates challenges in the management and regulation of the system,” said Namgay Dorji, the Deputy Chairperson of Good Governance Committee.
The current maximum monthly pension is Nu 35,344, while the minimum is Nu 780 ngultrum.
Notably, 10 per cent of retired civil servants depend on pensions of less than Nu 2,000 per month.
Meanwhile, other members expressed concerns about the pension system and said a Pension Act is needed.
“If the pension amount after retirement is inadequate, it will affect the social protection of pensioners. Additionally, pensioners will struggle to sustain their livelihoods. Moreover, if the pension system is improved, we can prevent experienced civil and public servants from leaving their jobs and encourage them to enrol in the pension scheme,” said Kuenga, MP, Nyishog_Saephu.
Health Minister Tandin Wangchuk said, “When enacting the Pension Act if we can work holistically on social protection, the pension system, and its sustainability, it could increase the pension membership coverage from nine per cent of the population, which would be beneficial.”
“If a pensioner dies, their spouse must be at least 52 years old to receive the benefits. As for children, the pensioner’s contributed amount is not provided once the child turns eighteen. Moreover, if the child has a disability, what happens when they turn eighteen? These are some of the issues in such cases,” said Namgay Wangchuk, MP, Lingmukha_Toedwang.
Currently, the pension membership covers only civil and public servants.
In this regard, the finance minister also said that the government has allocated two billion ngultrum and is developing a social protection mechanism to cover all Bhutanese.
Finance Minister Lekey Dorji said, “The total accrued past service liabilities as per the latest Actuarial Report 2022 is at Nu 48.953bn for civil service pension and Nu 18.745bn for the armed forces pension scheme, a total of Nu 67.698bn while the total asset as of 30th September 2024 is Nu 58.451bn, which means there is a shortfall unfunded liability of close to Nu 10bn. As responsible representatives of the people, we should be mindful of this while making any decisions.”
The finance minister said that it is important to establish a social protection mechanism before introducing the Pension Act.
He added that the government plans to present the Pension Bill in the next winter session, as it requires extensive consultations with relevant agencies.
Currently, the NPPF has over 61,000 members, of which 10,000 are pensioners.
Kinzang Lhadon
Edited by Kipchu
