KP Sharma 

National Pension and Provident Fund’s (NPPF) ongoing strategic reform is expected to address the issues of its sustainability, according to Prime Minister Dr Lotay Tshering.

To avoid entering into the pension system, an increasing number of people are reportedly quitting their jobs before they reach the qualifying service age of 20 years.

As per the NPPF record, 238 members who were in the service between 15 years and 20 years resigned last year to take lump sum payments, making it the highest number since 2017.




This trend has huge financial implications for NPPF and has raised the question of the fund’s sustainability in the long run.

Lyonchhen said that NPPF has many underlying challenges to adequately support its beneficiaries after their retirement.

He said that knowing who is eligible for the scheme and the life expectancy of the contributors play a bigger role in determining the sustainability of its pension scheme.

With only about 22.8 percent of the population covered (both Pension and PF), the current pension scheme according to him is very exclusive to a few occupational groups and not an open scheme where a larger section of the population can partake.




He added that the life expectancy of Bhutanese has increased over the years, making it hard for the contributors to have a decent life after their retirement.

The life expectancy as of 2019 is 71.58 years and public servants retire at the age of 58 to 60 years.

To make the pension more sustainable and efficient, the prime minister said that there should be wise investment opportunities in the country.

In terms of investment, he said that currently, NPPF does not have well-assured and sustainable investment opportunities in the country. “NPPF is restricted to invest portfolios where the return is not sure.”




According to Lyonchhen, the population gap in terms of decreasing fertility and increasing pension beneficiaries continues to be the challenge of the scheme.

To get a bigger amount after retirement, the prime minister said that one has to contribute more to the scheme.

NPPF members pay varying amounts due to different salaries based on their careers towards the scheme. The benefit is drawn based on the last basic pay at the end of their career.

“Our public servants are paid very low and if the deduction is high, it will affect their livelihood.”

The other challenge is the higher fixed deposit rate offered by other financial institutions that encourages people to take lump sum and keep it as fixed deposit.




He cited the example of France where the pension scheme is not robust despite the country trying to make changes for a long time.

The reforms in financial institutions, the prime minister said, would consider all these issues and result in major changes.

The pension schemes were introduced in 2002 as a mandatory retirement saving scheme for civil servants, employees of public corporations and enterprises and members of the Armed Forces to provide income security after retirement.