'This private sector pension scheme will cover 100,000 beneficiaries on a pilot basis'
Finance Minister AMA Muhith has said the government has planned to introduce a pension scheme for private sector employees in FY2018-19.
“We want to introduce a universal pension scheme for all people engaged in formal and informal jobs in the private sector,” he said, while delivering his budget speech at the House on Thursday.
He, however, added that the introduction of a universal pension scheme would require basic structural reforms which will take much time and entail spending a lot.
“It is essential for us to work on an appropriate policy strategy, devise an action plan, and put in place technical capacity to bring about equity and consistency between pensions awarded to public sector employees and those working engaged in the private sector…We have a plan to introduce this system in several sectors and at several places on a pilot basis,” the minister added.
Under the proposed scheme, an employee will subscribe to a specific amount to the pension fund by registering with the government-administered pension scheme, according to Muhith.
Where applicable, the authorities concerned will also deposit a specific amount into the employee’s pension account.
In the case of ultra-poor workers, the government will deposit a specific amount into their pension accounts.
Speaking to the Dhaka Tribune on Wednesday, a Finance Ministry official said: “This private sector pension scheme will cover 100,000 beneficiaries on a pilot basis, focusing on three classes of people – lower income savers, voluntary savers, and private sector employees.”
Initially, private sector employees such as RMG workers might be included on the system’s trial run, the official said.
Sources at the ministry said this pension scheme was first tabled in 2015 with the Cabinet’s approval of the National Social Security Strategy and a detailed plan focusing on the formulation of the universal pension system.
A year later, on June 2 in 2016, Muhith in his budget speech for FY2016-17 said: “We are considering bringing fundamental changes to our existing pension system. Our plan is to implement an integrated government-run pension system for self-employed people and employees of private organizations.”
Later, on February 2 this year, at a program at the Secretariat, he said everyone in Bangladesh would be brought under a pension system.
“There will be an outline in the next budget to include the 160 million people of this country in that system,” he said.
At present, only 5% of the total population working as government employees enjoy pension schemes, while 8% of the remaining 95% people are employed in the private sector and do not enjoy pension benefits.
Countries such as India, Malaysia, Sweden, Denmark, Netherlands, Turkey, Croatia, Canada, and Australia have the best practices when it comes to pension schemes.