The long-awaited universal pension scheme, which was the dream project of the late finance minister Abul Maal Abdul Muhith, may become a reality soon.
The formation of the necessary authority is imminent, but all other required preparations have been successfully concluded, sources have said.
The Ministry of Finance is actively moving towards initiating the pilot phase of the universal pension scheme by July of next year.
Finance Minister AHM Mustafa Kamal will unveil the government's comprehensive plan during the upcoming budget announcement on June 1.
In this regard, Planning Minister MA Mannan has said: "This plan has been formulated by the government. Its work has been going on for a long time. It is almost final now. It will be reflected in the budget.”
The scheme is said to be a plan of the Awami League government dating back to its earlier term.
Former finance minister AMA Muhith outlined this scheme in the proposed budget for the fiscal year 2017-18. He also mentioned the possibility of a pilot project for its implementation.
He mentioned the scheme as one of his dream projects. Unfortunately, he could not see it realised.
Although the Awami League came to power in the 2018 elections, Muhith did not get any ministerial position in that term. Hence, the plan was shelved.
After taking charge as finance minister, AHM Mustafa Kamal took over the project and started to work on it.
The Ministry of Finance expects that the universal pension scheme will be fully implemented across the country by 2025.
Pilot program
Initially, this pilot program will be launched in Dhaka and one other district as a model district. The program will then gradually be implemented in the remaining districts across Bangladesh, sources at the Ministry of Finance said.
Top officials of the ministry said that there are approximately 60 million people in Bangladesh who are capable of working. Hence, introducing a pension scheme for all of them is an enormous task.
Before initiating the scheme, it is essential to establish administrative and technological infrastructure, seek foreign consultancy services, and make extensive preparations, they noted.
Progress made for the scheme
The chairman and members of the authority constituted to manage the pension scheme are expected to be appointed by the first week of July, according to an official order issued on February 13.
A preliminary decision has been taken to set up their office on one of the floors of the newly constructed Finance Building inside the Secretariat, officials said.
Meanwhile, the officials at the Ministry of Finance have undertaken the preparations for the universal pension scheme even before formally assuming responsibility.
This includes the formulation of relevant laws and the completion of a draft strategy paper outlining the scheme's rules and policies.
Once the recruitment process is finalized, the authorities will be able to commence the pilot program efficiently, sources said.
Product schemes
It has been revealed that the government has prepared to launch the universal pension scheme with six types of product schemes.
All products will have a minimum subscription requirement, with the option for people to contribute more if desired.
The financial benefits provided by the respective product schemes will be proportional to the accumulated premiums within the fund managed by the authority of the pension scheme.
The funds deposited as contributions from citizens to the pension fund - will be invested in the government's profitable infrastructure sector along with investment in government treasury bills and bonds. This will reduce the government's dependence on bank loans.
Apart from the profit from the investment, there will also be government contribution to the fund.
However, the percentage of the government's contribution has not been determined yet.
After the universal pension scheme is fully operational across the country, those employed in government jobs will also be included in this pension system.
Apart from the current government employees, those who will join the government service till 2025, will get the pension from the government following the current system.
Categories for the scheme
According to sources from the Ministry of Finance, the scheme is being designed by categorizing the country's 100 million citizens between the ages of 18 and 50 into different groups.
These categories include -- private institutional employed pensioner scheme, expatriate or non-resident pensioner scheme, working class scheme, informal population scheme, government-funded scheme for populations covered by social security programs, and student scheme.
Currently, government employees are not being taken into account in the public pension system.
In determining the potential product scheme, factors such as an individual's age, workplace, income, social status, and ability to contribute at the prescribed rate will be taken into consideration.
According to the law, a registered pensioner is required to make contributions for a minimum of 10 years after joining the scheme.
Meanwhile, Bangladesh Bureau of Statistics (BBS) and the updated voter list of the Election Commission (EC), the country has approximately 100 million citizens aged between 18 and 50. And these individuals have the opportunity to be part of the pension system.
However, initially, only those who are interested in the scheme will be included in the system under the six types of product schemes, until it becomes mandatory for everyone.
According to the sources, out of the number of product schemes that will be introduced, only those included in the “Government-funded Scheme for Population Covered by Social Security Programs” will bear a part of the fixed rate contribution.
