Salary revision doubles pension and provident fund contribution

This article was originally published on this site

…But it also increased pension 

Yangchen C Rinzin 

The salary revision for civil servants, corporate employees, and members of armed forces increased the monthly pension contribution, according to the National Pension and Provident Fund (NPPF) annual report.

NPPF received Nu 4,033.47 million (M) as monthly pension and provident fund contribution from about 65,414 members in 2019-2020 financial year. “The total contribution received in 2018-2019 was Nu 2,702.51M.

The report also stated that NPPF, however, had to pay more as pension than the contribution they received. “NPPF paid Nu 605.63M as monthly pension in the 2019-2020 fiscal year.”

It also stated the company paid Nu 891.22M as refund of provident fund contributions and other benefits although they received Nu 1,381.97M as contribution in the fiscal year 2018-2019.

According to the 2019-2020 report, while civil servants and some of the corporate members contributed 11 percent and employers contributed 15 percent, NPPF members working with Druk Holding and Investments companies contributed 15 percent and employers contributed 15 percent.

NPPF also saw a total membership of 65,414 as of June 2019, which is 8.47 percent of the total population. “However, pensioners increased to 7,643 compared to 7,038 the previous year, which is an increase of 8.4 percent,” report stated.

The average age of the members contributing was 42 years and 60 years for pensioners.

The report also claimed that despite the Covid-19 pandemic, planned activities and the projects were executed within the budget and on time. “But NPPF had to forgo Nu 180.16M in revenue as part of the monetary measures initiated by the government and Royal Monetary Authority.”

The amount was forgone to help revive the economy during the fourth quarter of the financial year, May to June 2020.

Although NPPF targeted to achieve return rate of 8 percent, NPPF managed to achieve only 7.12 percent. “This was because of the pandemic that created limited investment avenues and adverse economic conditions,” the report stated.

NPPF also generated gross revenue of Nu 2,884.84M against the targeted revenue of Nu 3,000M. The revenue also includes notional gains and losses. But the report claimed that NPPF recorded a growth of 12.94 percent in its fund size with Nu 36,146.22M to Nu 40,822.08M.

Meanwhile, NPPF sanctioned about Nu 6,800M in loans to corporate entities in various sectors including tourism, dairy, trading, and energy production.

From the total loan approved, only Nu 5,300M was disbursed where major financing of Nu 2,692M was carried out by NPPF as a part of key financing partner with Druk Air Corporation Limited. The loan amount was used in purchasing the new Aircraft Airbus Neo A320.

NPPF also refinanced Dungsam Cement Corporation Limited with loan amount of Nu 1,560M and invested Nu 55M in T-Bank Bonds, among many.

NPPF as a major sources of fund, also provided Nu 536M as soft loan to State Trading Corporation of Bhutan Limited (STCBL). The loan was invested in stocking up essential items to be used during the pandemic.