Dechen Dolkar

The National Pension and Provident Fund (NPPF) plans to bolster retirement security for the elderly population through the establishment of a fixed pension for citizens aged 65 and older to prevent poverty among senior citizens.

NPPF officials revealed this during the presentation to the Good Governance Committee of the National Assembly on Monday.

Currently, the NPPF administers a contributory pension system that reaches only about 9 percent of the population.

The NPPF highlighted the need for government support to offer old-age income security in order to prevent senior citizens from falling into poverty, which would otherwise pose a potential financial burden on the government.

To address this issue, the NPPF proposed a fixed pension for citizens aged 65 and older, subject to periodic reviews every three to five years to adjust for inflation. This initiative aims to complement the existing contributory pension system, ensuring that basic living expenses are met.

In addition, the NPPF suggested establishing conditions for non-contributory pensions to work in tandem with contributory schemes, broadening the safety net for vulnerable populations.

According to the NPPF, the 2023 parametric reform proposal for civil servants is still awaiting government approval. 

As of September 30, 2023, the NPPF serves 10,284 pensioners—6,240 civil servants and 4,044 military personnel—with 64,909 active members. Around 74 percent of its members are civil servants, while 21 percent come from the armed forces and 5 percent from the private sector.

In 2023, contributions totaled Nu 4,413.35 million, a slight decrease from Nu 4,556.22 million in 2022. In 2018, NPPF received Nu 2,640.40 million, and during 2017-18, contributions amounted to Nu 1,219.99 million.

However, last year alone, the NPPF paid out Nu 5,541.55 million to its members.

As of August 2024, the NPPF’s financial standing shows total receipts of Nu 46,372.91 million, with Nu 7,181.05 million refunded for provident fund accumulations and Nu 7,526 million disbursed as pensions.

The NPPF officials also addressed the issue of job turnover, citing system transformations, limited job opportunities, and management practices as the main factors contributing to attrition, rather than the pension scheme itself.

They highlighted that only 5 percent of youth aged 18-20 opted out of the pension scheme, challenging the perception that it is unattractive to younger workers.

In terms of contributions, only 13 percent of members have contributed for more than 20 years, 5 percent have contributed for 18 to 20 years, and just 4 percent have contributed for 16 to 18 years.

Regarding revenue, NPPF earned Nu 2,823.10 million as of August 2024, down from Nu 3,873.93 million the previous year. Last year, the NPPF generated a net revenue of Nu 3,371.74 million.

Advertisement