In its move to bank on populism, the government is set to introduce the much-awaited universal pension scheme before the next national elections which are supposed to be held in December 2023, or January in the following year.
The government advocates that the scheme will be kicked off to protect mainly the low-income people when they retire.
A draft of the Universal Pension Management Act-2022 will be placed before the cabinet on June 2 with the provisions of the government’s contribution to the underprivileged and distressed citizens.
The policy holders will be entitled to a 50 percent loan from their deposited premiums, officials said.
The government is also looking for some experts to run the company to be formed as heading such a universal pension authority would be a daunting work, an official said.
The company will have some 6 crore people under the scheme.
The bosses will make a policy saleable and find out profitable investment for the deposited premiums, the official said.
“After enacting a pension law India could not run their pension scheme in full swing,” the official said.
According to the draft of the universal pension scheme, the country’s citizens aged between 18 and 50 could participate in it by contributing a certain amount of premiums. However, some secretaries wanted to raise the age limit of the beneficiaries.
A secretary also wanted to know about the indirect liabilities to be created for the government to bear under the scheme.
National Pension Authority
The head office of the National Pension Authority will be established in Dhaka city but the branches will be set up outside anywhere in Bangladesh.
The authority will be constituted with a chairman and four respective members. The chairman of the authority will be CEO of a state-run organisation and the authority will make profitable investments in local and foreign sources with the accumulated premiums.
Sources of pension funds
Subscription of citizens and organisation and the government’s contribution will be the sources for the pension fund. The benefits of the low income and distressed citizens and the income of the company will be generated from the investment to be placed in profitable businesses.
Meanwhile, the government is claiming that the proposed universal pension scheme is a timely initiative providing the fact that the current rate of dependent people in the economy is 7.7 per cent which will grow to 24 per cent in 2050 and 58 per cent in 2075, respectively.
On February 18, the finance minister apprised the Prime Minister Sheikh Hasina of the proposed scheme.
Two week ago, Finance Minister AHM Mustafa Kamal said the universal pension scheme would be introduced within the next six months to one year for all willing public servants.
In April 2014, the then finance minister AMA Muhith had made an announcement on making a universal pension scheme in his budget speech and later asked the Financial Institutions Division to finalise the draft law.
He reaffirmed his commitment in the following years and announced the launch of a pilot project to introduce the pension scheme for the employees of private banks and corporate organisations in 2018. He also announced the introduction of a universal pension system from 2021.
But after the first announcement, two years went by because of a dispute on the question of which department of the finance ministry would run the pension programme.
Over the next two years, a team led by an additional secretary of the Finance Division toured various states of India and gave a presentation in 2016 on how to launch the programme.
The initiative came to a halt when the head of the team, former additional secretary ARM Nazmus Sakib, was transferred to the Office of the Chief Controller of Imports and Exports in 2017. He went on pre-retirement leave (PRL) in 2019.
In 2020, an initiative was taken to prepare the concept paper by employing former additional secretary of finance Nazmus Sakib on an outsourcing arrangement, but that did not work out due to the outbreak of the novel coronavirus.
