Bangladesh plans to embrace universal pension era

Finance Minister AMA Muhith has said they plan to introduce universal pension scheme for all private sector jobholders in Bangladesh.

Senior Correspondentbdnews24.com
Published : 7 June 2018, 06:42 PM
Updated : 7 June 2018, 07:28 PM

Presenting the national budget for FY2018-19, he said on Thursday they would start piloting the scheme in some special places this year.

He, however, said introduction of universal pension scheme “calls for fundamental structural reforms which will take time and entail huge cost.”

“It is necessary to work out appropriate policy-strategy and action plan and put in place technical capacity to bring about equity and consistency between the pension awarded to the public sector employees and the working population engaged in private sector both at formal and non-formal outfits,” the minister told parliament.

Pensioners of the public sector constitute the “smallest portion” of the elderly population of Bangladesh, he said.

Currently, 700,000 to 800,000 families of retired government employees and several private organisations get pensions.

A total of 3.5 million elderly poor people, in addition to government pensioners, are getting old-age allowance of Tk 400 per month. This number represents only a quarter of the total elderly population. However, the amount is not sufficient for a decent living.

He said “it is obvious that following the normal demographic trend, the proportion of elderly population will also increase in our country like developed countries”.

“It would then be difficult to support them through budget transfers while our government is firmly committed to cascade down the benefits of economic growth to everyone and thus reduce income inequality and social discrimination.

“Therefore, we want to introduce a universal pension scheme for all working population engaged in private sector both formal and non formal.”

Under the proposed arrangement, he said, an employee will subscribe a specific amount to the pension fund having registered his name in the government administered pension scheme.

Where applicable, the appointing authority will also deposit a specific amount into the employee’s pension account.

Following its earlier commitment, in the case of ultra-poor workers, the government will deposit a specific amount into the pension fund.

“The fund thus constituted will be invested and the income generated there from will be accumulated here,” Muhith said.

The finance minister also highlighted the government’s reforms to bring “qualitative changes” in pension management, pension payment system and coverage of pension.

“We have abolished the existing system of encashment of 100 percent pension to ensure uninterrupted income flow for government employees after retirement,” he said.