It is reported the government plans to bring in legislation to upgrade and develop public and private pension schemes in Bangladesh.
This is a huge undertaking with major implications for all citizens and employers in the land. It is imperative that the government consults widely and draws upon lessons available from other countries, to ensure the schemes it proposes are practical to implement and can deliver benefits at optimum cost.
Foresight now can pay many dividends by reducing administrative costs and maximising investment opportunities for pension funds in future.
With our youthful population and the demographic dividend of many more people entering the workforce than leaving it, now is definitely the right time to start saving to provide funds for people in retirement.
In practice there are many questions to be explored. The mooted Citizens’ Pension to guarantee a set monthly sum to poorer senior citizens is the simplest to consider, as it can build on experience from social safety net programs.
Proposals for a Private Sector Pension Program however, require much deeper consideration.
How will it be funded? If contributions are compulsory, how high is fair and what tax benefits can be used to increase them? How and who will invest funds? Will benefits be guaranteed and transferable between employers?
There is certainly merit in trying to establish a framework that helps all employees. To work in practice though, the government has to be able to answer such questions in detail. It must get the principles and details right, from the beginning.