The Ministry of Finance has announced that the Prottoy scheme of the universal pension system has commenced from Monday, the first day of the current fiscal year, July 1.
Alongside, some details of the universal pension's Prottoy scheme have been clarified.
The ministry provided clarification on the pension scheme as the indefinite strike of teachers and employees of public universities is underway across the country for the second consecutive day on Tuesday.
In a notification signed by Public Relations Officer Gazi Touhidur Rahman from the Ministry of Finance on Tuesday, it was mentioned that the Prottoy scheme has been introduced for autonomous, semi-autonomous, state-owned, and its subsidiary organizations to bring all levels of society under a sustainable pension system.
Pension Scheme: Public university teachers’ strike enters day 2Currently, there are 403 autonomous, semi-autonomous, and state-owned institutions, among which about 90 have pension systems. The remaining institutions are under the Contributory Provident Fund (CPF) scheme.
Employees under the CPF scheme receive a one-time gratuity but no pension. Additionally, a large portion of the population outside government, autonomous, semi-autonomous, and state-owned institutions lacks a structured pension system.
To address this, the government has introduced a universal pension scheme to establish a well-structured pension framework for all classes and professions.
Under Section 14(2) of the Universal Pension Management Act, 2023, provisions have been made to introduce pension schemes for all citizens.
What led to the nationwide strike by public university teachers?From July 1, 2024, or thereafter, all employees joining autonomous, semi-autonomous, and state-owned institutions will be mandatorily included under the Prottoy scheme.
The finance minister explicitly mentioned in the 2024-25 fiscal year budget speech that government employees joining on or after July 1, 2025, will also be covered under the universal pension.
Clarifications on Prottoy scheme
The notification stated that teachers or officers-employees employed until June 30 will continue to be entitled to all pension benefits as before.
Currently, the government pension system follows an unfunded defined benefit system, with pension expenses met from budget allocations as needed.
From July 1, 2024, a defined contributory pension system will be implemented, with provisions for monthly deductions from salaries similar to other countries.
Contributory system
Under the Prottoy scheme, 10% of the basic salary or a maximum of Tk5,000 (whichever is less) will be deducted from the employee's salary, and an equal amount will be contributed by the respective institution or organization. These amounts will be deposited into the employee's corpus account.
The notification mentioned that the government's financial obligations under the unfunded defined benefit system continue to increase, making it unsustainable in the long run.
Finance Minister: Recruits in govt jobs to get universal pension benefitsOn the other hand, the funded contributory pension system will create a fund based on contributions and investment returns, making it a sustainable long-term pension system.
Notably, India has also implemented a funded contributory pension system since 2004.
Through the introduction of the new pension management system, it will gradually be possible to bring people from all classes and professions under a sustainable social security framework, ensuring financial inclusion and inclusive development.
Change of workplace
Teachers at any public university will receive service protection and pay protection upon applying through the proper authority if they are appointed to the same or higher position at the same or another university, as it is not considered a new appointment.
DU, JU teachers to suspend classes if Universal Pension Scheme not withdrawnIn such cases, they will remain eligible for existing pension benefits. Only teachers and employees newly appointed at public universities on or after July 1, 2024, will be included in the Prottoy scheme.
Age limit
Although the Universal Pension Management Act mentions receiving a pension from the age of 60, university teachers will retire at 65 and receive a lifetime pension from 65.
The government will make the necessary legal amendments accordingly.
‘Prottoy’ pension scheme launched for employees of autonomous and statutory bodiesThe notification also stated that lump sum grants and earned leave are provided based on leave entitlement, which will remain intact if leave is accumulated.
Monthly pension
To ensure the social security of participants in the contributory pension system, a reasonable amount of monthly pension has been prioritized over a one-time gratuity.
Therefore, gratuity provisions have not been included; instead, the monthly pension amount has been set several times higher than the existing monthly pension.
Lifelong amount
For example, if Tk5,000 is deducted monthly from a salary under the Prottoy scheme, and an equal amount is contributed by the institution, a pensioner will receive a lifelong monthly pension of Tk124,660 after 30 years.
Citizens aged 18-50 can join universal pension schemeThe total accumulated amount from the employee's own income would be Tk18 lakh, and if they receive a pension for 15 years, their total receipts would be Tk2.24 crore, which is approximately 12.5 times their contribution.
If the pensioner lives for 30 years after retirement, they will receive about 25 times their contribution.
Nominee
Under the existing system, a pensioner receives a lifetime pension, and upon their demise, the spouse and disabled children receive a lifetime pension.
In the new pension system, the pensioner will receive a lifetime pension, and in case of the pensioner's death, the spouse or nominee will receive the pension for the remaining period up to 15 years from the pension start date.
For instance, if a pensioner passes away after receiving a pension for 5 years, the spouse or nominee will receive the pension for an additional 10 years.
