The government is going to introduce a pension scheme for all citizens over the age of 60 within the next one year.
Published : 23 Feb 2022, 09:49 PM
Finance Minister AHM Mustafa Kamal filled the media on the details of the proposed universal pension scheme after a meeting of the Cabinet Committees on Public Purchase and Economic Affairs on Wednesday.
The pension scheme will be introduced within six months to one year, Kamal said. Laws and regulations will be formulated within this period and a body will be formed to oversee it.
Under the scheme, the registered individuals will be able to enjoy the facility from the age of 60 until their death. Those between 18 and 50 years of age will be included in the plan for now.
WHY UNIVERSAL PENSION
The Awami League had promised to introduce a universal pension scheme in Bangladesh in its manifesto for the 11th parliamentary elections, Kamal said.
“We’re going to implement it now. This will be a remarkable achievement. I sincerely thank the prime minister for this. It was her idea and she kept telling us to execute it. Everybody will benefit from it.”
At present, only government employees in the country get pensions. But the Awami League had promised to bring everyone, including private employees, under a pension scheme.
“The average life expectancy in Bangladesh is now 73 years. The number will go up to 80 in 2050 and 85 in 2075. It means that a working person will live for another 20 years after his retirement in the next three decades. But they will not have any income at that time. So, only the government can take their responsibility,” Kamal said.
THE PROPOSAL
>> All working citizens between the ages of 18 and 50 will be entitled to receive the pension benefit. Bangladeshis working abroad will also be able to take part in it. However, employees of government and autonomous organisations will be considered later as they are currently covered by the government pension scheme.
>> All citizens between the ages of 18 and 50 can open a pension account based on the information provided in their national identity cards. Initially it would be optional. The government has plans to make it compulsory later.
>> A person will become eligible to receive a monthly pension if he pays a fee for at least 10 consecutive years. There will be a pension account for every citizen. The account will remain unchanged even if a person changes his profession. The minimum monthly fee will be fixed. However, in the case of expatriates, there will be an opportunity to pay on a quarterly basis.
>> The beneficiary will have to ensure the annual deposit. Otherwise, the account will be temporarily suspended. It can be reactivated later by paying the dues and a late fee.
>> Pension will be given at the prescribed rate against the deposit along with the dividends accumulated once the specified age (60 years) for pension is reached. A person will then receive pension every month until his death.
>> A person’s nominee will be entitled to his monthly pension if he dies before the age of 65 and will receive it for a fixed period.
>> There will be no opportunity to withdraw the money deposited in the pension fund in one go. However, 50 percent of the deposit can be taken as loan, which has to be repaid with interest.
>> If a person dies before fulfilling his 10-year quota, his deposit will be returned to his nominee along with profits.
>> The pension deposit will be considered as investment and considered for tax rebate. The monthly amount received for pension will be completely free of income.
>> The government will bear the expenses associated to the pension authority and other related costs. The regulator will invest the money deposited in the fund in accordance with the prescribed guidelines and make efforts to maximise profits.
It is a preliminary proposal, Kamal said. It will be amended and more suggestions will be incorporated.
"The government will give back as much as the participants deposit. We will add more to the plan by observing how the neighbouring countries are operating such schemes.”
PROFIT CALCULATION
The finance minister presented an estimation of the benefits of this pension scheme to the reporters.
A person will receive Tk 64, 776 in pension until the age of 80 if he or she starts depositing Tk 1,000 every month from the age of 18 until 60, Kamal said.
If they start depositing money into the fund at the age of 30 and continues until 60, they will receive Tk 18,908 in pension every month.
However, if they deposit more than Tk 1,000 every month, the pension amount will rise proportionately.
The minister said it was only a projection. The real picture will emerge after the legislations are passed and the pension authority is established.