According to a draft National Pension and Provident Fund (NPPF) Policy, less than one in five of the country’s working population is covered under retirement benefits scheme such as pension and provident fund schemes, exposing most of our workforce to social vulnerabilities after retirement.
However, things are expected to change for the better when the draft NPPF Policy 2017 comes into effect.
According to the policy, all citizens employed, either on contract or regular employment, including the self-employed and members of national workforce, will be covered under for retirement benefits.
About 83 percent of the country’s labour force is not covered by any retirement benefits scheme.
Including private employees, only about 17 percent of the total labour force is covered under retirement benefit schemes such as pension and provident fund. Only 2 percent of the total private employees are covered under retirement benefit schemes.
The policy stresses that it is important not only to strengthen the existing pension systems but also institutionalise other savings schemes designed to help the entire labour force to protect themselves against unforeseen situations during old age and ensure decent post-retirement life.
According to the draft policy, in the past, the traditional social support practice in Bhutan ensured security to the people in event of deprivation and old age. Elderly people were cared for by extended family arrangements and mutual aid societies.
“However, with socio-economic development and modernisation, the traditional social support is rapidly weakening. With increasing urbanisation, rural–urban migration and increasing labour force mobility, families are becoming smaller and more dispersed, thereby eroding the ability of the extended family systems to function as social safety nets,” it states.
This trend, it states, will become more pronounced over the years.
The government shall provide non-contributory pension scheme for elderly citizens aged 60 years and older. The government shall develop eligibility criteria and determine the amount of such benefit.
The Ministry of Labour and Human Resources will enforce provisions on pension and or provident fund as per the Labour and Employment Act 2007, which states: “An employee, upon retirement from the services shall be entitled to the following benefits gratuity, and provident fund or pension.”