NPPF annual report cautions that pension scheme will not sustain without reforms
NPPF: The National Pension and Provident Fund’s (NPPF) can sustain its civil pension scheme only until 2042, and the armed forces pension scheme until 2039, if reforms are not undertaken.
This was deduced from the funded ratio, a measure of pension system’s unfunded liabilities against its assets. In other words, for a pension fund to be sustainable, the rate of contributions should be adequate to meet the current service cost and payment of benefits.
A 100 percent funded ratio means that a system has sufficient assets to pay all benefits earned by all its members.
In its annual report, NPPF reflected that its funded ratio currently stands at 50 percent for the civil pension plan and 35 percent for armed forces pension plan.
An NPPF official requesting anonymity said the pension fund was sustainable, but there could be distortion in the cash flow, meaning there would be a mismatch in fund inflow and outflow.
“Improving the funded ratios to 100 percent will require enormous funding by the government, which do not look viable at this juncture,” the report stated.
The changing population demography is another aspect that is affecting the funded ratio. The official said that the population demography was such that more people would exit the pension scheme in the same span of time with lesser people joining the scheme.
This again means that rate of contributions towards the pension system would experience a sluggish growth, while payments would speed up.
In the last fiscal year 3,436 new members joined the scheme, while 1,583 members exited from the scheme, but this trend is bound to reverse, considering the demography.
The population projection made by the National Statistical Bureau (NSB) reveals that declining fertility and consistent increase in life expectancy would result in doubling the number of older persons or people nearing retirement age by 2030.
In absolute terms, it is projected to increase from 29,745 persons in 2005 to 58,110 persons by 2030.
However, with the average age of the pension members currently at about 34 years, the increase in pension expenses is limited when growth in number civil servants is contained. Today, most of the members are in the age bracket of 25-35 years. About seven percent of the total population is NPPF members.
While officials said NPPF was striving to maintain the funded ratio at least at the current level, it would be a challenge if there were further ad-hoc increases in civil service pay scales.
This is because, when more funds are lying idle, the institution’s liabilities increase, albeit enhancement of cash flow in the short term. But in long run, it will worsen the funded ratio, the report stated.
“It must be recognised that ad-hoc increases in salary scales have huge detrimental effects on the long-term sustainability of the pension plan,” the report stated.
The official said that a National Pension Policy is in its draft stage. “Once the policy comes in place, then an Act will to be proposed,” he said.
Meanwhile, it is estimated that the annual contributions to pension and provident fund accounts constitute about 5.22 percent of gross domestic saving.
It is also said that pension income represents about 1.29 percent of household income.
The membership of the pension plan continued to increase with the civil service growing by about three percent during the fiscal year 2013-14.
As on 30 June 2014, there were 418 employers (agencies and organisations) and 50,728 members registered with NPPF.
Payments to pensioners from both the civil and armed forces amounted to Nu 203M in the last fiscal year, an increase of 28 percent over the previous year.
During the same time Nu143.5M was paid as provident fund benefits to members leaving the civil and armed forces.
By Tshering Dorji
Swiss and Austrian govts. continue to provide funds to bolster Bhutan’s judicial system
LSP: The Austrian and Swiss governments committed Nu 149.6M for the judiciary sector to support access to justice in Bhutan, with the launching of the joint legal sector programme (LSP) yesterday at Tashichhodzong.
Two new district courts will be constructed in Punakha and Wangduephodrang under the LSP. The construction cost is estimated at Nu 46.3M and Nu 46.2M respectively. Besides, 10 students will be provided scholarship to study law in renowned universities of Austria and Switzerland, while three future faculty members of the Royal Institute of Law (RIL) would get the opportunity to pursue studies overseas.
The Gross National Happiness Commission (GNHC) will manage the LSP. The implementing partners are the Supreme Court of Bhutan, Federal Administrative Court of Switzerland (FAC), Bhutan National Legal Institute (BNLI) and RIL.
The GNHC secretary, Austrian Development Corporation’s (ADC) resident coordinator, Christine Jantscher, and head of cooperation of the Swiss Agency for Development Cooperation (SDC), Matthias Meier, launched the joint LSP 2014-18.
GNHC officials said the LSP was also expected to boost institutional partnership between FAC and the Supreme Court of Bhutan through trainings.
Matthias Meier said that addressing legal needs of the vulnerable segments of society was a priority.
“This will strengthen the rule of law and Bhutan’s democracy,” Matthias Meier said.
The programme will also strive to enhance access to justice by supporting some Bhutanese civil society organisations to play important roles in providing legal aid and assistance. GNHC officials said LSP supports the 11th Plan goals of three legal sector institutions – the Supreme Court of Bhutan, BNLI and RIL.
Austrian coordinator Christine Jantscher said the parties would ensure that funds were used efficiently, and envisaged sector results could be achieved with joint efforts.
GNHC secretary Sonam Wangchuk thanked the SDC and ADC for their continued support in strengthening the legal sector in Bhutan.
“Such assistance will help promote the good governance pillar of GNH,” he said.
The joint LSP is a consecutive phase of the previous joint programme funded by Switzerland and Austria from 2009 to 2014.
Since 2009, the project supported development of the judiciary sector through capacity building and construction of courts.
By Dechen Tshomo
Lack of specialists to analyse data on the state of water resources has held up compilation
NEC: The raw data and a database are ready for the water resource inventory, but lack of expertise to analyse it had delayed the compilation of a first ever inventory.
The water resource inventory was conducted to assess the state of water availability and situation of water sources in the country. It was initiated, following concerns raised by dzongkhag representatives during the mid-term review of the 10th Plan, on water shortages and drying up of sources. The Gross National Happiness commission directed the National Environment commission (NEC) to conduct the water resource inventory.
However, the inventory, which began in August last year, would be completed in June this year, NEC officials said.
“We have all the raw data and database of the inventory but we don’t have the capacity to analyse these data,” officiating head of water coordination division, Jigme Nidup said. “We’re in a process of hiring a consultancy to analyse these data, which will be completed in June.”
The same goes for the ambient water quality testing conducted in the Wangchu last year. The division is yet to analyse this data as well.
“As per the 11th Plan, the division has increased the sampling sites to conduct ambient water quality testing, which we’ve conducted twice in Wangchu this year,” Jigme Nidup said. NEC will also train their officials to analyse such data in future.
“The training will look into how to analyse, based on standards and water sample collection methods, and interpret the final results,” he said.
Meanwhile, Clean Bhutan, a private project, had also conducted a pH test on the Wangchu last year, wherein high level of alkalinity was found in the river. The pH test showed readings from 6 to 6.2.
Clean Bhutan’s Nedup Tshering said that this meant the river was polluted and contained high levels of toxicity.
“The toxicity of the river is mainly caused by trash thrown in the river, which in turns affects the aquatic ecosystem of the river,” Nedup Tshering said. “More than 23 storm water drainage systems flow into the Wangchu with trash everyday.”
After exactly one year, Clean Bhutan conducted a test, where they found out an increase in growth of algae around the storm water outlets this year.
“The growth in algae means there’s high level of alkaline in the river,” Nedup Tshering said. “When I go around cleaning campaigns, public is concerned about the waste thrown in the river, but they don’t know where to throw.”
It’s time that the agency concerned take up this as a serious matter or else the Wangchu will be another Bagmati river in Nepal, flooded with trash, in the making in a few years from today, Nedup Tshering said.
By Thinley Zangmo
The news is that the National Pension & Provident Fund (NPPF) stands at precarious spur. If there is no significant reform, civil pension scheme will last only until 2042, and the armed forces’ pension scheme until 2039.
As we report on pension schemes and its sustainability in our paper today, the message is that we should be begging for a major reform. It is a new dawn today and not all mornings are sunny indeed. Mists and clouds of prosperity often have us looking for a way out.
And way out of status quo is what we need today as our demography and allied realities are rapidly changing because dreams, however good or bad, do not last long. Everything depends on human perspicacity and the will to turn them into reality.
Bhutan is an old nation with young population. It is a society that woke up late to development and covered amazing heights and distances. That has been our pride. We made the run we had to. Our successes have also led to some tough challenges that we need to tackle as they are witin our reach.
For a pension fund to be sustainable, the rate of contributions should meet current service cost and payment of benefits. According to NPPF’s annual report, its funded ratio currently stands at 50 percent for the civil pension plan and 35 percent for armed forces’ plan. This means taking the funded ratios to confortable percentage of 100 or more will require huge funding from the government.
Unless the government steps in with specific and relevant measures, money outflow will be more than money inflow, shaking the entire system and the life of the institution itself. Only 3,436 new members joined the scheme in the last fiscal year. At the same time, 1,583 members exited from the scheme.
This means Bhutan’s young population will excert tremendous pressure on the scheme in the coming years. According to National Statistics Bureau, declining fertility and rising life expectancy will result in doubling of the number of older persons nearing retirement age by 2030.
One of the challenges facing the scheme is the rise in civil servants’ pay against the reality of shrinking civil service. This will cause imbalance in institution’s cash flow and add burden to its liabilities that is increasing. The investments that NPPF has made so far in bigger and promising projects are not paying off.
All these are stories of myopic planning that involves all ministries and sectors in the country.
What we need, as an immediate measure, is a policy at the very least, to guide the sustainability of the scheme for the service that the nation does to itself.
Not forthcoming, though, was proof of damage to the party as a result of the defendant’s Facebook posting
Libel: Druk Phuensum Tshogpa representatives presented seven documents as evidence against Dasho Paljor J Dorji in its libel case, but did not show any proof that the party had suffered damages during the evidence hearing yesterday at the Thimphu district court‘s Bench V.
The only indication of damages it suffered, submitted yesterday, was that the party was losing its registered members in droves.
Opposition member and Nubi Tangsibji member of parliament (MP) Nidup Zangpo said that, following the posting of the statement in the social media, what his party suffered were loss of trust and confidence in the party.
“These damages are about sentiments and emotions that are intangible and hard to prove in real or physical terms,” he said, adding that a lacuna has been created among party members.
Trashiyangtse-Bumdelling-Jamkhar MP Duptho and Nubi Tangsibji MP Nidup Zangpo replaced Drametse-Ngatshang MP Ugyen Wangdi to represent the party in court.
They submitted evidence to prove that Dasho Paljor J Dorji’s August 2014 Facebook post was defamatory to the party, that it violated the public service code of conduct requirement to remain apolitical, and violated sections 317 and 320 of the Penal Code of Bhutan, among others.
A copy of the opposition leader’s letter to the prime minister, requesting his intervention to take appropriate action against the defendant for posting a defamatory statement on Facebook, and violating the code of conduct of public servants, was also submitted.
The duo also submitted a copy of the prime minister’s letter to the opposition leader, where he has refused to take action against the defendant, on the basis that the defendant holds a public service position outside the purview of the government.
“It proves that the prime minister refused to take action against the defendant as the advisor to the National Environment Commission, despite him being the chairperson of the commission,” Nidup Zangpo said.
“This led the plaintiff to initiate criminal charges against the defendant, after all rules of procedure were exhausted.”
The representatives submitted a copy of the royal command to the chairman of the commission, appointing the defendant as the special advisor to the commission. They said the command explicitly includes the provision of the office and personal assistant, implying that the defendant was required to function within the purview of the NEC’s mandate, and within the framework of the rules and regulations of the royal civil service commission (RCSC).
DPT also submitted a copy of the staff directory of the commission, and commission members’ list, to prove the prime minister was the chairman, and that he ‘has every authority to take appropriate action against the defendant’.
A copy of Dasho Paljor J Dorji’s last month’s pay slip was also submitted to the court, stating that the defendant received the salary and allowances of a deputy minister for a duration and nature that far exceeded any normal short term contractual, elected, or a consultancy employment.
“The nature of the employment is long term and very much an integral part of an agency that is governed by the rules and regulations of the RCSC,” Nidup Zangpo said. “The evidences prove that the defendant is a public servant, receiving his pay and allowances from the consolidated fund.”
The interpretation of article 30 (2) of the Constitution, which states “The Pay Commission shall recommend to the government revisions in the structure of the salary, allowances, benefits, and other emoluments of the Royal Civil Service, the Judiciary, the Members of Parliament and Local governments, the holders and members of the Constitutional offices and all other Public servants with due regards to the economy of the Kingdom and provisions of this Constitution,” clearly makes Dasho Paljor J Dorji a public servant, Nidup Zangpo said.
“Having established that the defendant is a public servant, and that too an integral part of an agency governed by the RCSC, the principle of natural justice requires that the defendant should follow the minimum code of conduct to remain apolitical,” he said.
“We cannot ignore the intention of the existing laws, even though not explicit for a specific individual, and make an exception for an individual,” he submitted.
Laws require all public servants to be apolitical, except for members of the National Assembly.
“Since, the defendant is not a member of the National Assembly, the minimum requirement of code of conduct to remain apolitical, as per the RCSC Act, applies to the defendant,” Nidup Zangpo said.
However, the representatives did not submit as to what laws the defendant could be penalised under in the case. There were no prayers at the end of their written submission, but the representatives said it remained the same as submitted earlier.
Outside the court, the plaintiff representatives said they came only to submit the evidences and left the court a little bemused after the hearing.
The defendant’s lawyer will present his evidence on March 12.
By Tshering Palden
Culture: To study if the registered organisations were working in line with the Religious Organisations’ Act, 2007, the commission for religious organisations last December temporarily stopped the registration of new religious organisations.
Last year, the commission during a meeting found that some organisations had failed to submit the yearly accounts and assets report to the commission. To address this issue and others, the review began this month.
Deputy Chief Programme Officer with the commission, Phurba Dorji, said the review would take some more time to be completed. “If there are organisations that are not following the Act, we will conduct an awareness program to make them familiar with the Act,” Phurba Dorji said.
There are currently 94 religious organisations registered with the commission. Figures on how many more are waiting to register was not available.
Once a religious organisation is registered, it is exempted from paying tax and is also given trainings to help them run the office. “The members today are well trained in dzongkha Unicode and office management,” Phurba Dorji said.
The commission also prepares syllabus for religious organisations to maintain a consistent comprehension of Buddhist teachings for all the members. “The commission wants to help the religious organisations in all the way possible,” Phurba Dorji said.
Meanwhile, as a part of the 60th Birth Anniversary of the Fourth Druk Gyalpo, the commission is planning to introduce a new syllabus in June.
By Younten Tshedup
Nanong gewog has the honour to host the first central school, Yelchen, to open (Feb. 15)
Education: Yelchen central school, the first such institute in Nanong gewog, Pemagatshel will open as scheduled on February 15.
About 18 teachers, both new and old, including the central school’s new principal, who was transferred from Yurung middle secondary school, have already joined. The school is expected to increase its teaching staff to 24, once the students return.
However, it could take some time for classes to begin. The number of students that will enroll in the school is yet to be compiled, although the school education department targets to admit 471 students this year from pre-primary (PP) to class 10. A budget of Nu 9.117M has been allocated for the 471 students to last until July.
Dzongkhag education officer (DEO), Pema Dorji, said that the budget was allocated for students’ stipend, stationaries, uniforms, utensils and beddings.
He added that the boarding students would be provided, free uniforms, plates, mugs, mattress, blankets, sports gear and pillows. “The budget is also allocated to procure washing machine to wash clothes for PP to class three students, firewood and electricity,” DEO said. “Stationaries would also be provided free to both boarding and day scholar students.”
The DEO also said, if the budget was enough, they might also provide free uniforms to the day scholar students. The uniforms will be procured once school opens.
“The plan is to enroll 50 percent of the students in boarding and the rest as day scholars, based on the walking distance,” he said. “The school will provide boarding facility to 120 boys and girls each.”
Standing tall and magnificent, the only concrete structure in the gewog, besides the hostels, the central school has nine classrooms, a dining hall, kitchen, toilets, playground, four staff quarters, a principal’s quarter, and a science laboratory.
The school will benefit two other gewogs, Zobel and Shumar. “Students from these three gewogs will be given priority to join the central school, since there is a good response from parents,” Pema Dorji said.
He said the school would also look into enrolling students recommended by schools from other gewogs, especially those who are from poor families and can’t afford stationary and uniforms.
Constructed in 2012, the school was handed over to the dzongkhag in October last year. Indian President Pranab Mukherjee inaugurated the school.
By Yangchen C Rinzin, Pemagatshel
Crime: The prime suspect in the Central Plaza murder, Gyembo, was arrested on February 8, the police chief said in a press conference, yesterday.
Police chief, brigadier Kipchu Namgyel, said that a citizen’s arrest had been made, and that the suspect had been handed over to Punakha police.
The police chief added that a reward of Nu 20,000 was dispatched yesterday to the individual, who had arrested and handed over the prime suspect.
It was pointed out that the prime suspect had been interrogated and found to have a criminal record. The suspect served a prison term of a year and three months. Police are on the look out for a second suspect, who was present when the murder occurred, and are appealing for the person to come forward to serve as a witness.
The incident occurred on January 13.
A sweeper had found the victim, identified as Phub Tshewang, 29, from Paga goenpa, Chapcha, in a pool of blood.
Police ruled the case as a homicide, and found that the victim had been murdered in an attic flat, and then thrown off the balcony. The flat belonged to Gyembo, who went missing following the incident.
In the press conference yesterday, police said that Gyembo and Tshewang, who had been under the influence of a drug, had got into a physical fight in Gyembo’s attic flat, following an argument.
In the process, the two threw bricks at each other, and eventually ended up with Tshewang being incapacitated, after being repeatedly hit on the head with a brick. Gyembo then dragged Tshewang and threw him over the balcony.
By Gyalsten K Dorji
I have been often cautioned to refrain from being “emotional” when writing about important issues. People say that one fails to be “objective” when one is emotional. But the case of Goongtongs is a very, very emotional issue. I cannot believe that unless one is extremely callous, one cannot help but be emotional. The suffering is just too great, and the apathy of the elected leaders and the bureaucrats even greater.
Something fundamental has to have gone wrong with the Bhutanese society if a section of us are reduced to employing dummies imported from China, to defend ourselves and our properties from the pillaging wild animals. But that is what is happening – some farmers in the East have now resorted to buying and using stuffed tigers to scare away marauding wildlife. Unfortunately, this ploy is not foolproof – it has a number of drawbacks.
One, they are not cheap so not every farmer can afford them. Two, they have limited success – and that too only with macaques and langurs. Three, they are ineffective during nights and they do not work against other predators such as porcupines, deer and wild boars. And four, over time, even the macaques and langurs realize that the stuffed tigers are dummies – so they carry them away and shred them to smithereens.
The proliferation of wildlife in the rural areas have been so prodigious that villagers say that the wild boars now invade villages and roam freely even during day – something that never happened in the past. Triggered by increase in their numbers, the macaques have become so audacious and bold that they now enter village homes and walk away with bundles of maize. Any resistance is dangerous since it results in attacks by the macaques.
It should have been obvious by now that our laws and Acts are skewed and lopsided. No law can be called useful or progressive if it takes away a human being’s and, for that matter, animal’s fundamental right to self-defense and preservation.
We should all understand that the Goontong tragedy has the potential to spiral out of control. We should not only work towards preventing further Goontongs in the villages, we should endeavor to reverse the trend – draw away migrants from the urban centers to restock the villages with Goontongpas.
Goontongs cause extreme behavioral change – it turns producers into consumers. This reversal of role has serious implications – both on the person as well as on the country as a whole.
Kuensel reported that in 2011, Bhutan imported food items from India worth 4 billion Rupees (US$77 million) – that too at a time when we were faced with severe Rupee shortage. Of that, 629.30 million Rupees (US$12 million) represented import of meat items. It is pathetic that we cannot even produce meat for our own consumption. The excuse: we are Buddhists and cannot kill! How long are we going to hide behind pseudo-religious obstinacy?
Something is terribly amiss if a supposedly agrarian society needs to import so much food from outside. Something has gone terribly wrong somewhere – if we are unable to produce enough to feed a measly 700,000 people. And yet, what can be expected when an entire town of Deothang cannot produce one kg of Kharang to sell me?
Contributed by Yeshey Dorji
Photographer & Blogger
Kuensel couldn’t print today’s issue last night because of some technical problems. The paper is being printed now and will be available by late afternoon. Please accept our sincere apologies for the delay.