Economic analysts have described the planned universal pension scheme in Bangladesh as an “excellent” idea but urged caution in its implementation, bdnews24.com reports.
They have advised the government to finalise a law by examining in detail the ability of Bangladeshi citizens to make deposits into the fund for the scheme.
“Universal pension is a wonderful concept developed for a welfare state. The idea needs to be implemented,” said Mohammed Farashuddin, former governor of Bangladesh Bank.
He said the government should not rush the implementation of the scheme because of the technical issues involved in the plan. “So, it probably needs to be dealt with by experts and the draft [plan] needs to be examined.”
The ability of people from the lower and middle classes to pay funds regularly for the scheme is very low, he said. “The issue of financing is important. It has to be thought over deeply.”
Suraiya Zannath, a lead financial management specialist at the World Bank, said the government needs to move carefully because the scheme will include people from all walks of life. “All the decisions need to be taken carefully to attract people towards the scheme."
The Awami League had promised to introduce universal pension in Bangladesh in its manifesto for the 11th parliamentary election. Prime Minister Sheikh Hasina recently ordered officials to take steps to launch the scheme.
The government published a draft law on a national pension authority on Mar 30, aiming to introduce pension benefits for all. People can give their opinions on the draft law until Apr 12.
According to the draft, all working citizens between the ages of 18 and 50 will be entitled to receive the pension benefit.
A person will become eligible to receive a monthly pension if he or she pays a fee for at least 10 consecutive years. There will be a pension account for every citizen. The account will remain unchanged even if a person changes his profession. The minimum monthly fee will be fixed. However, in the case of expatriates, there will be an opportunity to pay on a quarterly basis.
The beneficiary will have to ensure the annual deposit. Otherwise, the account will be temporarily suspended. It can be reactivated later by paying the dues and a late fee.
Pension will be given at the prescribed rate against the deposit along with the dividends accumulated once the specified age, which is 60 years, for pension is reached. A person will then receive a pension every month until his or her death.
Bangladeshis working abroad will also be able to take part in it. However, employees of government and autonomous organisations will be considered later as they are currently covered by the government pension scheme.
But the draft does not mention how the beneficiaries of the social safety net for the elderly, people with disabilities, widows or freedom fighters will be included in the pension scheme.
“Some pension schemes already exist in Bangladesh,” said Suraiya, referring to these programmes. Since all pensions or social security programmes are implemented by different ministries or departments, they can be brought within the fund management framework of the new pension authority. “It will get an institutional structure.”
“Then it will be more beneficial. This will ensure the continuity of the universal pension scheme and make it more sustainable as well as more productive.”
According to the draft law, in consultation with the government, the authority may set up the required number of front offices or may establish or hire and manage agencies supporting pensioners.
Scheduled banks and the field level offices of the postal department and any other government or private institution as prescribed by the law shall act as the front office of the pension scheme.
Suraiya advised the government to follow the opinions of experts and global best practices in finalising the rules.
“A concept paper has been created initially which is good. Now the job is to activate different organisations. We need to think about how it will be done. The government will have to go a long way to take it forward.”
