Contact us at TOLL FREE NO 1039 from 09:00 AM to 05:00 PM during summer hours and 09:00 AM to 04:00 PM during winter hours.

Investment Mandates


The National Pension and Provident Fund took over the Government Employee Provident Fund operations from the Royal Insurance Corporation of Bhutan with asset approximating Nu. 1.9 billion on 3rd July 2000.

The Royal Insurance Corporation then as an investment manager of GEPF funds was explicitly mandated by the Royal Government to function as a financial institution and a development banker. In order to ensure appropriate returns to the GEPF funds, the RICB was authorized to invest in a host of financing activities as per annexure enclosed.

On taking over the GEPF operations, the NPPF had not been mandated to function as financial institution. The Government Working Committee and the ADB consultants envisaged an ideal environment whereby the NPPF will carry out investment of funds through professional investment firms. The responsibility of the NPPF for managing the funds was to be contained to reviewing of investment decisions of the professional investment managers.

As no professional investment firms were available, the National Pension and Provident Fund approached the Bank of Bhutan, Bhutan National Bank, Royal Insurance Corporation of Bhutan and the Royal Monetary Authority for undertaking investments of funds on behalf of NPPF on a fee basis. While RMA has no mandate for carrying out such investments being a central banking authority, other financial institutions turned down the offer. The Financial Institutions explicitly pointed out that due to excess liquidity problem coupled with non-availability of investment opportunities in the country it is difficult for them to carry out investments on behalf of the NPPF as the investment management of NPPF funds would be in direct conflict of interest with their own investments.

Faced with the bleak investment climate, the funds were initially parked with BOB and BNB at very low yields. Subsequently with the auspices and the kind approval of the Ministry of Finance funds equivalent to USD 21 million has been invested abroad through a professional investment firm. The balance funds are kept at very low returns with the Bank of Bhutan, Bhutan National Bank and the RICB. The net inflow of funds is Nu. 30 million a month, which brings a surplus of over Nu 300 million per annum which requires investments.

Presently the National Pension and Provident Fund is faced with the unique situation which needs immediate attention:


  • Responsibility of earning minimum return for sustaining both the National Pension Plan as well as the Provident Fund for the members. For the National Pension Plan, the minimum annual return requirement is 8.25% while expected returns to PF is much higher;
  • Bleak investment climate and opportunities
  • Excess liquidity in the financial sector. The excess liquidity problems may be mainly attributed to several factors:
    • Structural problems with limited domestic absorptive capacity for investment in view of the limited market, insignificant private sector and shortage of skilled labor.
    • Macroeconomic policies of industrial, trade and foreign investment policies, fiscal and limited monetary control.
    • Insufficient capacity of intermediation in financial sector with limited efficiency and competition in the financial system leading to limited access to credit with high interest rates on loans and requirements for collaterals
  • Underdeveloped capital market for securities and bonds. There is evidence that a robust capital market is important for the success of a pension fund.

As the investment manager, it has to administer the funds of the Pension and Provident Fund with due diligence. Given the huge asset size compounded with poor domestic investment climate in the country, the NPPF has challenging task of managing the funds. The sustainability of the National Pension and Provident Fund Plan will depend on the returns on its investments. Therefore, the investment policies and strategies will form an integral part of the
NPPF. As the Investment Manager, the NPPF’s responsibilities relating to investment operationsare as follows:

    • To control, manage, and invest the assets of the NPPF in accordance with investment policies of the National Pension Board
    • Receive guidance and direction of the Investment Management Advisory Committee on its investments operations
    • Recommend and suggest changes in the investment strategy and policies from time to time.
    • Monitor and review investment strategies including performance
    • Submit periodical reports to the National Pension Board and the members.

Investment Mandate

In line with the present market structure of Bhutan and the experiences of the other pension funds in the region the Royal Government approved the Investment Mandate of the National Pension and Provident Fund vide Executive Order No COM/03/02/787 dated April 8, 2002. The salient excerpts of the order pertaining to the investment mandate are enumerated as under:
The National Pension Board shall be responsible for deciding as to the type of financial products in which member contributions are invested so that the viability and long term sustainability of the pension plan is assured, provided that investments shall be limited to the following:
a.Cash and Cash products;
b.Securities issued by the Royal Government, or the Royal Monetary Authority of Bhutan;
c.Securities and other evidence of indebtedness listed on the Royal Securities Exchange of Bhutan.
d.Shares of companies that are listed on the Royal Securities Exchange of Bhutan
e.Construct, acquire and dispose residential housing and commercial complexes and acquisition of building sites and lands for promotion of real estate development.

Subject to terms and a condition as may be prescribed by the Board, the NPPF may grant loans
and advances to: –

    1. The Royal Government;
    2. Institutions, agencies and Government projects;
    3. Public and Joint Sector Corporations;
    4. Public Limited Companies incorporated under the Companies Act of Bhutan;
    5. Any of its current members for the purchase,construction or repair of residential house against the security of the house and/ or his/her accumulated provident fund contributions.

Subject to the approval of the Royal Government, and on such terms and conditions as deemed fit by the Board, the NPPF may make investments outside Bhutan. For this purpose it may engage the services of a professional investment managers and the Board shall be responsible for drawing up the guidelines for such investments, and for monitoring and evaluating the performance of the manager.”