The government plans to form a pension fund management authority for private sector employees, which is likely to start functioning in the beginning of 2018, official sources said.
An act will be formulated to introduce the authority and the World Bank will provide assistance to the project.
Local insurance companies are expected to get involved with the initiative. “If the local insurers are involved in both public and private sectors’ pension schemes, the initiative will get a boost,” Senior Finance Secretary Mahbub Ahmed told Dhaka Tribune.
He said the private sector pension scheme would be “a brain child” of Finance Minister AMA Muhith.
He cited the example of India’s insurance sector “which has successfully run the public and private sectors’ pension schemes.”
“A finance division team led by Additional Secretary at Finance Division Nazmul Sakib will be sent to India to see Indian pension scheme fund projects,” Mahbub Ahmed added. “Such visit will help us acquire practical knowledge on functioning of a pension scheme project and formation of an authority under a law.”
Mahbub Ahmed said he had already asked Bank and Financial Institutions Division Secretary M Aslam Alam to prepare concept papers on making a policy or a law for the private sector pension scheme.
In the first week of this month, the Bank and Financial Institutions Division decided to take up the project worth $100m.
The three-year project - Bangladesh Insurance and Private Pension Market Development - will be financed by the World Bank and the government.
The multilateral lender will provide $80m and the government will bear remaining $20m, said a finance ministry official, adding that the project is likely to get the nod from the World Bank board next month. After the lender’s approval, the Bank Division will formulate a law for functioning of the scheme.
Local businessmen leaders said it was not possible to implement the proposed scheme without talking with stakeholders and amendment to labour law of 2006.
They said necessary fund also needed to be injected into the scheme as a total of 181,000 firms are registered under the Office of the Registrar of Joint Stock Companies and Firms.
Of the total firms registered with the Office of the Registrar for Joint Stock Companies and Firms, 71% are private and public companies and 22% are partnership firms.