Growing NPPF plans more investments

Despite increas­ing competition in the fi­nancial market, the Nation­al Pension and Provident Fund (NPPF) has recorded a growth of 14.57 percent in its annual revenue genera­tion.

According to the annual financial report of NPPF, the gross revenue generation increased from Nu 512.98 million in the 2008-2009 financial year to Nu 587.73 million between 2009 and 2010. Most of the revenue was generated from invest­ments in real estate, loans and the Royal Securities Ex­change (RSEB).

In the 2009-2010 fiscal year, NPPF’s income from investments increased by 15.34 percent. This has been mainly attributed to the in­crease in rental income and interests on housing and educational loans.

The total revenue gener­ated from loans increased to Nu 1,228.565 million with a total of 683 clients. The loan sector grew by 27.30 percent with an increase in clientele base by 121. NPPF is now working towards in­creasing its clientele base to 10,000 by the end of 2011.

Besides the housing and education loans under the credit operations, the other returns were generated from loans provided to the government owned insti­tutions and projects, joint sector corporations, public limited companies and in­vestments in securities list­ed on the RSEB.

The average returns gen­erated from loans was 7.05 percent while the returns from equities were 15.23 percent. NPPF invested in equities of Penden Cement Authority, State Trading Corporation of Bhutan Lim­ited, Bhutan National Bank, Kuensel Corporation and the Dagachu Hydropower Project.

At the end of June, 2010, the NPPF had a fund size of Nu 8.97 billion with a net cash flow of over Nu 100 million a month.

The NPPF membership, by the end of June 2010, increased from 40,222 to 42,393 which represents about 6.32 percent of the total population. It marked a significant increase in the membership by 5.40 per­cent compared to the previ­ous year.

NPPF also saw major changes in the system fol­lowing the civil service pay revision in January 2009 when the government intro­duced new pension reforms.

The contribution rates increased from eight to 11 percent of the basic salary and the retirement pension benefit increased to a maxi­mum of 40 percent of the salary. The option of availing lump-sum or monthly pen­sion was also extended from 10 to 20 years.

In future, the NPPF plans to invest mainly in the power sector. It has already invested Nu 1.6 million in the Dagachhu power proj­ect. Apart from that, NPPF is also looking to invest in other projects such as the Nikachu and Begana power projects which will require domestic financing.

It has been estimated that NPPF will get an opportu­nity to invest at least up to Nu 520 million in the power sector during the tenth five year plan. NPPF has also commenced financing for the Dungsam cement proj­ect worth Nu 1.01 billion as long-term loan at an interest rate of 10 percent a year.

Meanwhile, NPPF is also working towards improv­ing public service delivery by introducing hotline num­bers and helping customers get information on pension by SMS (Short Message Ser­vices).

The director of NPPF said there were plans to intro­duce a system for pension­ers to withdraw money via ATM cards.

By Pushkar Chhetri

One Response to “Growing NPPF plans more investments”

1. Pensions for granted - Tshering Tobgay’s Blog says:

   January 19, 2011 at 5:42 pm

   [...] good news is that, despite increased competition in the financial sector, NPPF seems to be performing well. In the last year, the membership base has increased by 5.4%, from 40,222 to 42,393 members. [...]

   Reply