The government has decided to create separate authorities to manage public sector provident and pension funds, according to a Finance Division official.
Finance Division Senior Secretary Mahbub Ahmed said: “We want to create two separate authorities to manage government employees’ provident and pension funds.”
There will be more emphasis on the use of the provident fund for commercial purposes like share market investments and investments in the country’s infrastructure, he said.
The secretary said interest paid on the public servants’ provident fund created a burden on the government and the government hoped to use the fund for financial gain.
A Finance Division officer said officials would visit India within the next two months to observe the operations of similar authorities in the neighbouring country.
The Employees’ Provident Fund Organisation (EPFO) is a statutory body of the government of India under the Ministry of Labour and Employment established in 1952. Total assets under management were more than US$91 billion as of May 1, 2013.
On October 1, 2014, Indian Prime Minister Narendra Modi launched universal account numbers for the Employees’ Provident Fund to enable provident fund number portability.
Bangladesh’s finance minister in his budget speech hinted that a pension fund management authority would be created soon to effectively manage and properly use the massive funds.
At present, more than 500,000 retired government employees enjoy pension benefits but there is no designated fund or authority to administer pension-related activities, creating an imbalance in public expenditure management.
Initially, the government will allocate funds for the authority to administer. Along with making pension payments from the fund, investments will be made in different portfolios, Finance Minister AMA Muhith said in his budget proposal speech.
“The International Monetary Fund has described Bangladesh’s pension fund outlay as very large; it is necessary to properly use the fund,” an official said.
As per the budget document, next fiscal year’s pension fund will be Tk11,584cr. In the 2014-15 fiscal year revised budget it was Tk8,607cr.
