NATIONAL PENSION & PROVIDENT FUND ~ Presented by, Tenzin Lhaden & Tshering Lham

Presentation Outline  Introduction  Objectives  Operational Functions  Services & Products offered

Brief Background  Established in March 2000  NPPF was launched in July 2002  NPPFP covers about 40,222

Objectives (a) increase members’ welfare by providing;  Post service retirement benefit  Social Support to surviving families  Establish mechanisms & develop systems for saving plans  Housing facilities (b) to maintain long-term financial viability

Operational Functions  Registration of Members  Collection of Contributions  Delivery of Pension and Provident Fund Benefits  Investment of Funds

Services & Products offered

Pension Plan Monthly Income after retirement Provident Fund Plan Lump sum payment on retirement NPPFP Two Plans of NPPF

Pension Benefits  Benefits  Criteria  Pension benefit formula

Pension = No of years of service x 40% (avg. of last 24 months basic salary)  Benefit claim procedures 1.Completed application form (PF Refund form) 2.A copy of Retirement order 3.A copy of Reliving order 4.A copy of last pay certificate 5.A copy of RAA clearance 6.Completed application for pension benefits 7.A copy of Marriage certificate

NPPF MEMBER LOAN Housing Loan Education Loan I. C REDIT O PERATIONS

OBJECTIVES OF THE NPPF MEMBER LOAN MEMBERS HOUSING LOAN Launched on 1st July NPPF finance  The construction of building,  Acquisition of the flats,  Repairs and extension of the existing buildings, and  Transfer of loans 2. The NPPF plays a significant role in the nation building by directing its investments to areas of socio-economic development like building the social assets to the members during their working days.

3. The provision of the grace period for a year to the members is subjected to the members’ ability to complete the construction of the buildings. During such period, the EMI repayment is not required but the interest would accrue on the disbursed loan amount. 4.The main objective of extending this loan to the members at 10% interest is to provide affordable credit facilities to the members and to encourage them to secure their old age shelter while working.

Documents Required – Housing Loan  Application form - NPPF office/  Ownership Certificate  Building plan duly approved concerned authority  ID copy of the applicant & land owner  Two passport sized photographs  Insurance certificate (existing building)  Estimate of the work to be undertaken  Clearances from the financial institutions  Recent photograph of the construction/building  MC if the property is in the name of the spouse  Departmental undertaking  Letter of guarantee from property owner

MEMBERS EDUCATION LOAN  To encourage and assist the members in pursuing further education and in educating their children.  The PF balance of the member serves as the collateral thereby making this loan accessible to all the members irrespective of their owning any properties or not.  The repayment system of EMI deduction at source makes it hassle free both for the NPPF and the members. Launched on 1st March 2004

Documents Required – Education Loan  Application form - NPPF office/  ID copy of the applicant & beneficiary  Two passport sized photographs (applicant & beneficiary)  Departmental undertaking  Proof of Admission from the institute/School  In case of land/building mortgage:  Ownership Certificate (in the name of applicant/spouse/close relative)  Clearances from the financial institutions  Recent photograph of building  MC if the property is in the name of the spouse  Letter of guarantee from property owner  ID copy of land owner

How to Calculate Equated Monthly Installment? EMI= Amount X i (1+i)^ ⁿ { (1+i)^ ⁿ -1} Where: i= rate of interest e.g. 9%÷12 n=number of months (5 years = 60 months) EMI= Amount X i (1+i)^ ⁿ { (1+i)^ ⁿ -1} Where: i= rate of interest e.g. 9%÷12 n=number of months (5 years = 60 months)

Eligibility Criteria for availing loans Sl.NoParticularsEducation LoanHousing Loan 1EligibilityShould be the member of the NPPF for a more than one year Should be the member of the NPPF for a more than one year 2LimitMinimum Floor-Nu. 15, % of the total collateral (maximum) Maximum Ceiling Nu. 1,000, Rate of interest9%10% for new construction, renovation, Transfer 4Terms of repayment Max. of 15 years or years of service left whichever is earlier, or more then service period left if the client has enough PF balance -20 years (Urban) plus Grace Period of 1 year -Service year left (Rural) with a max. of 20 years 5. SecurityPrimary: Accumulated PF Balance Secondary: Land or concrete structured building Primary: Land and Building Secondary: Accumulated PF Balance

Status of Non Performing Loan

REQUESTS  Show the correct Net pay (problems with deduction later)  Proper Seal and Signature on the Departmental Undertaking  EMI deductions to be made as per the deduction letters  EMI to be remitted on time (5% Penalty on EMI charged to clients’ a/c)  Continued Support

II. INVESTMENT OPERATIONS INVESTMENT BACKGROUND NPPF receives around Nu. 50 million/month as contributions The I&C Dept. is entrusted with the duty of investing these funds Challenging task - earning a sustainable rate of return coupled with very limited investment avenues Safety - the most important factor

INVESTMENT OPERATIONS AS OF

Future Plans  NPPF is still looking for investment avenues  Invest more in the projects  Looking at the opportunities to invest in the new banks  Possibility of making further investment in Power sector projects.  Government Treasury Bills.

Thank You