The total NPPF membership was 53,998 as of June last year 

The National Pension and Provident Fund (NPPF) received a total of Nu 2.536 billion (B) monthly contributions from its members during the financial year 2016-17, according to the annual report for the same period.

This was an increase of 8.46 percent or Nu 198 million (M) in contributions from the previous year’s Nu 2.338B.

Pension funds benefits are paid monthly to members, whereas provident fund benefits are paid in lump sum upon retirement.

NPPF estimates annual contributions to pension and provident fund (PPF) accounts at 5.22 percent of the gross domestic savings.

As of June 30 last year, there were 53,998 members representing 6.9 percent of the total population. According to the annual report, the financial year saw an increase of three percent in the NPPF membership.

During the financial year, NPPF paid Nu 964.76M as monthly pension payments, and pension and provident fund refunds.

As of June 30 last year, 16,000 NPPF members availed of credit facilities from NPPF. The annual report states that loans under the home ownership scheme is designed in such a way that members can construct or acquire residential units while they are working.

Besides a competitive interest rate, NPPF also offers value added services such as design and planning during the construction phase at a subsidised rate.

The annual report also states that real estate is one of the strategic areas of investments being pursued by NPPF to match the long-term pension liability. The real estate sector, according to NPPF, provides opportunity for a stable rate of return and an appreciation in the asset base through its inherent inflation hedging characteristics.

NPPF today has only about two percent of its investments portfolio invested in real estate.

“Given the real estate provides good opportunity for pension funds to make suitable investments, the Real Estate Master Plan, which is currently under finalization lays down plans to take real estate investments to around 8 percent of the total investment portfolio in the next five years,” the annual report states.

The current investments in real estate yield around Nu 54M in rental revenue.

During the year, NPPF added two more properties to the existing asset base with the completion of the construction of a commercial complex to be used as offices near the NPPF colony in Thimphu.

A 16-unit residential building was completed and operationalised in Samdrupjongkhar. The conceptual plan for a commercial complex and a mixed-used building in the NPPF colony, Thimphu was also finalised.

The most important achievements of NPPF so far, the annual report states, has been the streamlining and institutionalisation of retirement benefits and contribution towards alleviating poverty for retired and old citizens.

However, the annual report states that the schemes provided by NPPF serves only a select occupational group since it was designed to cater only to civil servants, corporate employees, and members of armed forces.

“With rapid socio-economic development and its related impact, if NPPF is to remain relevant within the framework of our guiding philosophy of GNH, our membership base has to expand and we may need to cater to a larger section of the society,” the report stated.

Under the initiative of NPPF, a Pension and Provident Fund Policy has been drafted to extend the benefits to those who are not covered by any schemes. The policy, the report states, will ensure wider social security coverage, especially during old age and develop sustainable and affordable pension and or provident fund schemes.

MB Subba