“Far apart and close together” is an informative book that celebrates the enduring friendship between Switzerland and Bhutan. The book comes with a DVD on GNH.
Every MP was gifted this delightful book.
Did we accept the bag which cost Nu 1,800? Absolutely not, that would be corruption. Did we accept this book, valued at Nu 2,700? Absolutely.
Yesterday, the finance minister confirmed what we already knew – that the NPPF pension scheme is sustainable only for about 30 years. What does it mean? It means the pension scheme will not be able to pay benefits to all its pensioners in about 30 years. It means that by 2040, give or take a few years, total benefits payable to pensioners are projected to exceed total contributions of the members plus any income from its investments.
Why? There are a number of reasons. But, the main one is that our (and our employer’s) pension contributions are not “saved” for us. They do not stay in our individual account, to be invested to secure our future benefits.
Today’s contributions pay today’s pension benefits of today’s retirees. When we retire, younger ones should do the same for us … but, that’s where the problem is.
Today, the bulk of pension scheme members are young (almost 70% are below 35 years in age; more than 50% are between the age of 26 and 35). Our pension scheme currently has about 38,000 members, of who only about 1700 are the beneficiaries (1200 pensioners plus 500 surviving family beneficiaries). Many members and few beneficiaries: our pension scheme will appear to grow.
But, this is not likely to continue, because we do not expect the eligible employees (of the civil service, public corporations and armed forces) to grow in numbers. By the time this young group retires, pensioners will outnumber members by a big margin. Few members and many beneficiaries: our pension scheme will collapse.
The problem, however, is not that most of the pension scheme’s members are young. The real problem is that the way the pension benefits are defined is not sustainable. What we have is a defined-benefit plan that determines pension rates according to a formula, which is based on the salaries of its members. So, all things considered, benefits have not much to do with actual contributions, especially if the final salary is used.
What we should consider is a defined-contribution plan that will determine pension rates based on the actual contributions of individual members. And if higher pension levels are desired, members or their employers would make bigger contributions. A fully defined-contribution plan should be sustainable, simply because pensioners will get only what they and their employers set aside for retirement.
The good news is that we aren’t the only one with this problem. Many countries and companies have made exactly the same mistakes, and are now reforming. We can learn from their mistakes and successes.
The NPPF have been doing a lot of good work, especially after the Pay Commission was established. And the government’s decision to base pensions on 40% of the final salary will, no doubt, make them even more nervous. I hope the government will reconsider its decision. And I hope that the government will support the major reforms that will be needed to make our pension scheme sustainable.
And what should we do? Inform ourselves. For now, it’s important that all of us understand how our pension scheme works and what options we have. I’m learning. And, believe me, there’s a lot to learn. Wikipedia has a quick explanation on various pension plans and some international comparisons. And the NPPF website has information on our pension plan.
Postponing a problem won’t make it go away. It will only get bigger and uglier.
Pension is for our peace of mind. It gives us that precious sense of security. More security means greater happiness for us, our families and our communities. That’s got to be good for GNH. Let’s practice what we preach!
Branding matters. Our country is seen as Shangri-la; our environment pristine; and our people preoccupied with GNH. We enjoy a premium brand.
But what’s happening to the environment in Shangri-la is definitely not GNH.
I took this photograph of Thimphu on my way to work this morning. What we breathe is not good for our health. And not good for our image.
Branding is difficult. And expensive. Let’s protect what we have.
A lot of people followed the pay revision debate today. According to BBS, people throughout the country watched it live.
Well I saw this group of people right outside the National Assembly following the proceedings on live TV. The group was gathered around BBS’s OB Van – outdoor broadcasting van – to keep track of how their representatives were serving them. They didn’t look too excited.
A lot of people called me today. They were mainly civil servants expressing their frustration over the government’s pay revision report. They must be really frustrated. After all, by now they would know that a two-member opposition can hardly influence important discussions.
So I hope they’re calling the DPT MPs too.
And I hope they turn up to watch the debate. The visitors’ gallery is normally empty – it would be good to have it packed once in a while. At the least, it would remind us, politicians, to serve our masters, the people of Bhutan.
I met Tobgay today. He’s nine years old and has just completed Class II in Dechechencholing MSS. He was rummaging through my negibour’s waste.
In fact, Tobgay was recycling garbage. He was collecting various tins and bottles, and plastics and metals to sell to a scrap dealer in town. His part-time work would fetch him Nu 5 per kg for iron, steel and certain plastics; Nu 1 for every beer bottle; and Nu 30 per kg for aluminum cans. That’s easy money, he confided, because there’s always plenty of recyclable garbage.
Yesterday he and his friends earned Nu 130. They spent most of that money playing video games and eating. But today he plans to be a bit more cautious – he wants to buy a pair of jeans.
Thimphu’s garbage is screaming for better waste management. And the message is loud and clear: reduce, reuse, and recycle – we can’t afford not to!
Would you set aside a portion of your salary if, after you retire, you receive a comfortable pension every month? You probably would. Would you do so if the government matched what you contributed, and you received a bigger pension when you retired? You probably should.
But what if such a scheme is sustainable for only 30 years? Would you participate? I probably would – I’m 43 years old and I can expect to enjoy a pension till I reach 73. Naturally, anyone older than me would find the scheme even more attractive.
What if you are 35 years old and you retire at 60? You’d get returns for only five years before the scheme collapses. So you probably would not join. And if you are only 30 years old? You should not join. If you did, your monthly contributions would pay for my pension, and you wouldn’t receive any when you retire, because the scheme would have collapsed by then.
This is the reality of our pension scheme. It is sustainable for only 30 years (read Bhutan Times article). And it can get worse if the government dictates the conditions of the scheme. As, indeed, it already has by deciding to base pensions on final salaries (see the pay commission’s report and the government’s pay revision report, both published by the ministry of finance).
What the government should do is strengthen NPPF and give it independence. And then support the pension scheme to make it fully-funded. For that, members and their employers will need to contribute more; the retirement age will need to be increased; pensions will need to be more realistic; and the government will need to make big subsidies to pay for earlier excesses and to achieve desired pension levels.
Correcting our pension scheme won’t be easy. But it can be done. And must be done. Now. Otherwise our pension fund will be nothing more than a pyramid scheme that benefits the initial few at the expense of the rest.
We were given the government’s pay revision report today. Finally. And the speaker announced that we would debate it this Monday. Good.
I am happy that the government has decided not to increase the salaries of the prime minister, cabinet ministers and other ranks equivalent to ministers. The pay commission had recommended salary increases of 130% for the PM and 66% for cabinet ministers.
And I’m satisfied, more or less, that the government has decided to increase the salaries of MPs by only 20%. The pay commission had recommended a 100% increase.
But I’m left wondering why the government has decided to increase civil service salaries by only 35%.
For now, I am happy – happy and proud – that our government has decided against hefty pay increases for politicians. Good job.
We may have lost the elections. But I still read our manifesto every now and then. It reminds me of our promises. Reminds me to serve with humility. And to walk the talk.
The following article is a “box” from our manifesto. Enjoy.
Doing business isn’t easy anywhere
But, it’s really hard in Bhutan!
The World Bank has been looking into how easy it is to do business in 178 countries, from Afghanistan to Zimbabwe. Laws, regulations and their enforcements are evaluated in each of the following 10 stages of business companies’ life:
1. starting a business
2. dealing with licenses
3. employing workers
4. registering property
5. getting credit
6. protecting investors
7. paying taxes
8. trading across borders
9. enforcing contracts
10. closing a business
Doing Business 2008, the fifth annual report on this investigation, ranks 178 countries on the ease of doing business. Singapore is at the top, followed by New Zealand, USA, and other industrialized countries. No surprise. Democratic Republic of Congo is at the bottom, along with a number of other African countries. No surprise there, either.
Bhutan is ranked the 119th out of 178. You might say “no surprise!” But, we do worse than some African countries (Zambia, Uganda), parts of the world badly affected by war and internal conflicts (Pakistan, West Bank and Gaza, Sri Lanka), and distinctly worse than Bangladesh and Nepal. Surprised? We should be.
It is really hard doing business in our country, especially if you are small or self-employed. No wonder the private sector is not flourishing. No wonder the young people are having a hard time finding jobs.
Bhutan is particularly weak in areas such as trading across borders where we are ranked 149th compared to India (79th) and Bangladesh (112th); and in access to credit where we are 158th compared to India (36th), Bangladesh (48th) and Nepal (97th).
These statistics beg the questions: why is government standing in the way of Bhutanese doing honest business, generating income and creating jobs? And how can we expect the private sector be the “engine of growth” in such a hostile environment?
Doing Business 2008 including its country results is available to anyone at http://www.doingbusiness.org/. Reportedly, it is taken seriously by investors looking for business-friendly countries.
The day before yesterday we debated an important issue: roads. Roads are important as they are the lifeline of our country, and the only proven way out of poverty.
We debated this important issue because the public wanted us, their representatives, to talk about the need to improve and streamline the technical designs of the nation’s roads.
Who raised the issue? The public of Pemagatshel. Specifically, the people of Nanong-Shumar, and Khar-Yurung constituencies in Pemagatshel.
So I thought it was odd that the MPs representing these two constituencies were both absent. They were not there to introduce the issue or to contribute to the debate.
And who were the two missing MPs? The prime minister and the health minister representing Nanong-Shumar and Khar-Yurung constituencies respectively.
Tshering Tobgay is a Member of Parliament representing Sombaykha Constitutency in Haa. He is the Leader of the Opposition Party in the National Assembly of Bhutan.
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