On March 30, 2000, the Royal Government created the National Pension & Provident Fund (NPPF) of Bhutan as an autonomous oganization responsible for the management and administration of the Civil and the Armed Forces old age retirement plans in Bhutan. It functions under the direction and supervision of the National Pension Board consisting of members representing various stakeholders. Independent Committees such the Government Working Committee and the Investment Advisory Management Committee support the National Pension Board for providing supervision, guidance and advices on the operations of the National Pension and Provident Fund.After taking over the Government Employee's Provident Fund (GEPF), which had been in effect since 1976 administered by the Royal Insurance Corporation of Bhutan (RICB), it was restructured and replaced by the National Pension and Provident Fund Plan. It constitutes a two-tiered old age protection plan with the objective to provide monthly income as well as lump sum payment to the members on retirement.Tier 1 covers the National Pension Plan, which is a partially funded Pay-As-You-Go system defined benefit scheme. It is an old age security protection scheme that obtains contributions during the working period and provides benefits after retirement to its members and their spouses.Tier 2 covers the National Provident Fund Plan, which is a fully funded defined contribution scheme. Under the scheme, members receive lump sum payments of accumulated balances upon retirement.
Currently, the members of the National Pension and Provident Fund Plan are civil servants, employees of Government owned corporations and joint-sector companies. In addition, the armed forces of the Kingdom are covered under a separate scheme. There are plans for the old age retirement schemes to be gradually expanded to include sectors other than the civil servants and the corporations.