The government is going to introduce a universal pension system for Bangladeshi citizens within the next six months to a year.
People including expatriates living outside of the country aged between 18 to 50 years would be able to take part in it to secure their safety and security after retirement and thus ensure their better livelihood.
Finance Minister AHM Mustafa Kamal made the remarks while briefing the reporters after chairing two separate meetings on the Cabinet Committee on Economic Affairs (CCEA) and the Cabinet Committee on Government Purchase (CCGP) on Wednesday.
“The formulation of the universal pension scheme is a gift for the Nation from Prime Minister Sheikh Hasina,” the Finance Minister said, expecting that all citizens of the country would be benefitted from this pension scheme.
“The concerned law, rules and regulations would be framed in consultation with the experts and stakeholders,” he informed.
“Such scheme is a strong area for a developing country like Bangladesh and it will ensure social security for all. I believe that it will play a very effective role during the retirement period of the citizens,” he said.
Answering to a question, Kamal said that the pension authority would fix the subscription fee while even a tea stall or betel leaf vendor can take part in the scheme.
He told another questioner that the best practices of the neighboring countries can be followed in this regard while the scheme would be like contributory provided fund (CPF).
The Finance Minister said that it is the goal of the government to ensure that everyone gets a better life and livelihood.
He said that Prime Minister Sheikh Hasina in her election manifesto in 2008 had pledged to formulate a universal pension scheme to bring the elderly people under a sustainable and well-organized social safety structure.
In continuation of this, necessary steps have been taken to roll out such scheme, he added.
The Finance Minister informed that a universal pension scheme law would be enacted soon after incorporating the directives of the Prime Minister. Once the law is framed, then a full-fledged outline would be available in this regard.
He also mentioned that the universal pension scheme is very much necessary considering the increase in life expectancy, growing dependency ratio, and ensuring the security of the aged people.
The current life expectancy at birth in Bangladesh is 73 years which is expected to grow at 80 years in 2050 and 85 years in 2075. On the other hand, the current dependency ratio in Bangladesh is 7.7 percent which is expected to shoot up at 24 percent by 2050 and at 48 percent by 2075.
Highlighting the salient features of the universal pension scheme, he said that the expatriate Bangladeshi workers would be included in the scheme while the employees of the government and autonomous bodies have been kept out of the scheme for the time being. The government will take proper decisions in this regard in the future, he added.
Based on the NID cards, Kamal explained that anyone aged between 18-50 years would be able to open up their pension accounts while the system would be initially optional which would later turn as mandatory.
He said that an individual would be eligible to get a monthly pension after submitting subscription fees on a continuous basis for at least 10 years while there would be a separate pension account for the citizens of the country so that their pension accounts remain unchanged despite changing their jobs.
He said organizations can also take part in the pension scheme, but the proposed national pension authority would fix the subscription fee of the workers of the organizations in this regard.
The monthly minimum subscription fee would be fixed, but the expatriate Bangladeshi workers would be able to give their subscription once every three months, he said.
The beneficiaries will have to ensure their minimum annual subscription fee deposition, otherwise, their accounts would be frozen temporarily, he mentioned.
Later, their accounts can be made operational again after depositing the arrear fees with late fees, he added.
On completion of the stipulated timeframe of getting pension (60 years), the beneficiaries will get pension at a fixed rate against their deposits with cumulative dividends while the pensioners would be able to avail such facility until death, he mentioned.
If any pensioner dies before 75 years, then his or her nominated person would get a monthly pension until the age of the actual pensioner reaches 75 years, he informed.
The finance minister said there will be no provision for withdrawing the deposited amount of the pension scheme in one go, but following application, a beneficiary can take 50 percent loan against their deposits which should be repaid with interests.
If any registered pension scheme seeker dies before providing subscription for at least 10 years, then his or her amount would be given to the nominated person with interests, he mentioned.
The subscription fee for the pension scheme will be considered an investment as well as will be considered as a tax rebate, he said adding that, the monthly pension amount would remain income tax-free.
Kamal said this entire universal pension scheme will be transferable or simple as even if any person changes his or her job or place, his or her account balance, subscription fees and retirement facilities would remain intact.
He said that in case of the low-income group people, the government can provide a portion of the monthly subscription fee as a grant.
The government will bear the expenditures of the national pension authority and the related other organizations while the pension authority would invest the deposited amount in the fund as per the guideline, he mentioned.
For better understanding, the finance minister citing an example said that if anyone gives a monthly subscription fee of Tk 1,000 having a 10 percent interest rate and 8 percent gratuity and subsequently starts giving fee from 18 years till 60 years, then he or she would get a monthly pension of Tk 64,776 until 80 years.
On the other hand, he said if anyone starts giving fee from 30 years and continues it till 60 years, then he or she would get a monthly pension of Tk 18,908, he added.
But, if the monthly subscription fee goes more than Tk 1,000, then the monthly pension amount would also increase proportionately, he mentioned.