The Punjab Pension Fund, established after the enactment of the Punjab Pension Fund Act in 2007, serves the primary purpose of generating revenue to cover the pension liabilities of the Government. It manages two distinct funds: the Punjab Pension Fund (PPF) and the Punjab General Provident Investment Fund (PGPIF).
Punjab Pension Fund (PPF): This fund is dedicated to meeting the pension obligations of the government. It likely receives contributions from government employees and invests these funds with the goal of generating returns to fund future pension payments. The PPF is essential for ensuring that retired government employees receive their pensions.
Punjab General Provident Investment Fund (PGPIF): The PGPIF is established under the Punjab General Provident Investment Fund Act and is responsible for generating revenue to cover the General Provident Fund (GPF) liabilities of the Government of Punjab. The GPF is a scheme where government employees contribute a portion of their salary, and the government contributes to the fund as well. The PGPIF invests these accumulated funds in various avenues to earn profits and fulfill GPF obligations.
According to a Policy Research Working Paper from The World Bank in January 2008, it is mentioned that public pension funds can benefit from low operating costs due to economies of scale and reduced marketing expenses. However, poor investment performance is a common issue in many countries, often attributed to weak governance structures, government interference, lack of independence, and a lack of transparency and public accountability. The document states that the Punjab Pension Fund has taken steps to avoid these pitfalls by implementing a governance structure that aligns with international best practices in the pension fund industry.
In summary, the Punjab Pension Fund plays a crucial role in ensuring that pension and provident fund obligations of the Government of Punjab are met. It does so through careful investment management and by adhering to sound governance practices to prevent issues commonly associated with public pension funds.