Two separate institutions to handle pensions of government employeesPension Management Fund to oversee regular pensioners while Employees Provident Fund to manage contribution-based pension fund
Two separate institutions will handle the pensions of government employees— civil servants, teachers, army and police—after the Cabinet on August 1 decided to appoint Employees Provident Fund to manage the contribution-based pension fund.
The Pension Management Fund has been managing pensions for the retired government employees, who were recruited before the introduction of contribution-based pension system in the last fiscal year 2018-19.
“We have already revisited the organisational set-up for managing such pension funds,” said Sishir Dhungana, secretary at the Prime Minister’s Office, who is also the chairman of the Employees Provident Fund. “We will now create a separate unit to manage and mobilise the funds to be received under the new pension scheme.”
The Employees Provident Fund will be given the responsibility until the new permanent structure for managing the contribution-based fund is created.
The Employees Provident Fund, however, does not have any details about how much fund has been collected under the contribution-based pension fund and how many government employees have been enrolled under the system.
“The institution to manage the fund has just been determined. We hope to get all the details soon,” said Dhungana.
The Pension Management Fund also does not have details about the new hirings that were made in the last fiscal year.
As the government has not made fresh recruitments due to employees adjustment process in the federal set-up, not many employees have been enrolled in the new system, reckons Hemanta Raj Niraula, chief of the Pension Management Fund.
The government introduced the contribution-based pension system amid growing liability for the government under the previous system where a certain amount is allocated from the annual budget for pensions. The government’s spending on pensions grew by as high as 67 percent over the last five years, according to the Pension Management Fund.
In the fiscal year 2014-15, the government had spent Rs26 billion for pensions, which rose to Rs43.56 billion in fiscal 2018-19, according to the Pension Management Fund.
Due to the hike in the government employees’ salary this year, pension liability is expected to rise over Rs54 billion, according to Niraula.
There are currently over 271,000 pensioners from civil servants, teachers, army and police.