The trend is such that NPPF caters to more number of death cases than retirees
Benefits: For the past 16 years, the National Pension and Provident Fund (NPPF) recorded a higher number of deaths of members while in service than retirees.
From 84 pensioners in 2002-03, it increased to 4,830 pensioners in 2014-15, of which majority are deaths of members while in service. From last July until March this year, there are 5,166 pensioners. This includes the surviving spouse, children, orphans, dependent parent and members with permanent disability.
In case of death of members while in service, NPPF pays 50 percent of the deceased’s last month salary to the spouses. For instance, if the deceased’s last month salary was Nu 10,000, the spouse is entitled a monthly pension benefit of Nu 5,000. If the deceased is in the corporate or civil service, the spouse is entitled the pension benefit when he or she attains 50 years of age.
However, for the armed forces, the spouse is entitled the monthly pension benefit as soon as the husband or wife passes away. If the spouse remarries, the pension is discontinued immediately for both the spouses of the armed forces and corporate or civil servants, irrespective of the gender.
Similarly, children are entitled Nu 1,200 a month until they reach 18 years of age. NPPF officials said that if a member has five children, the first three elders receive pension until they reach 18 after which the younger children are entitled.
Spouses of young members are also entitled pension benefits if the deceased member has served for a minimum of three years. If they die before they complete three years in service, spouses will be entitled a lump sum amount, NPPF officials said.
The children and spouse receive a yearly increment of up to five percent.
NPPF’s chief of pension and provident fund, Sonam Yeshey said that although social security support is their objective, once a spouse remarries, it is considered that there is income supplement.
“If they don’t remarry, the spouses are protected with the minimum pension policy,” he said. For instance if a deceased member earned Nu 3,000 a month, the spouse is entitled Nu 1,500. However, under the minimum pension policy, the spouse would receive Nu 3,500 a month.
“It’s either 50 percent of the salary or the minimum level, whichever is higher,” he said.
Records show that between 2014-15, NPPF received a total of about Nu 1.4B as pension contributions and Nu 709.52 million (M) as provident fund contributions. The civil pension and provident fund plan recorded a total of 2,414 pensioners, an increase of 18.45 percent from the previous year of 2,038 pensioners. During the same period a total of Nu 252.93M was paid as pension benefits and Nu 150.20M as provident fund refund to the retirees.
Among the armed force members, between 2014-15, NPPF recorded an increase of 1.09 percent members from the previous year for which a total of Nu 230.32M was received as pension contributions and Nu 140.11M as provident fund contributions. The armed forces pension and provident fund scheme recorded a total of 2,416 pensioners during the same period, which is an increase of 6.99 percent from the previous year of 2,258 pensioners. A total of Nu 84.62M was paid as pension benefits and Nu 35.63 million as provident fund refund to armed force retirees in the same period.
Entrusted with the mandate to manage the pension and provident fund of the civil service, armed forces and state-owned enterprises, NPPF today covers only about 15 percent of the country’s total labour force. The total labour force is around 345,000 of which the NPPF has about 52,000 as its members.
NPPF’s annual report (2014-15) states that with the declining fertility along with the consistent increase in life expectancy, the number of older persons in the population is expected to double. The increase from 29,745 persons in 2005 to 58,110 persons by 2030, according to the report is an increase in their share to the total population from 4.7 percent in 2005 to 6.6 percent in 2030.
However, there is only a marginal increase in the working population at 10 percent only, signifying greater financial burden on the working group, the report stated.