Are you looking for Bangladesh universal pension scheme review: apply system rules guideline than you are right place. In this article we discuss about Universal pension scheme in Bangladesh, How to apply for Universal pension scheme in Bangladesh and scheme rules and requirements.
Bangladesh Universal Pension Scheme Review: Apply System Rules Guideline
A universal pension makes sure that any person above a certain age (different for each country) will receive a monthly stipend to support their daily expenses. The average lifespan for people around the world is climbing and because the retirement age is fixed, it is becoming more and more challenging for the elderly to support themselves for years after retirement, without a fixed income coming in.
What is universal pension scheme?
A universal pension makes sure that any person above a certain age will receive a monthly stipend to support their daily expenses. A new Universal Pension Scheme may be considered in view of the clarion call of the prime minister on universal social security and global trends, to cater to those not covered under EPS-95 including gig workers and self-employed persons,” the committee said in its report on pension reforms.
Current Stage of Universal Pension Scheme Project in Bangladesh
The government of Bangladesh recently announced its plan to offer this pension scheme to all citizens of Bangladesh above the age of 60 within 2023. The news was broken to the media by Finance Minister AHM Mustafa Kamal after a detailed meeting of the Cabinet Committees on Public Purchase and Economic Affairs.
The scheme is still a work in progress and the ironed-out version, complete with the finalized laws and regulations will be rolled out to the public within six months to a year.
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The scheme is the fulfilment of the promise made by the Awami League government in its 11th parliamentary elections manifesto as well as mentioned in the 2020 national budget speech, with Prime Minister, Sheikh Hasina, as the mastermind behind the idea.
The idea has come to fruition 8 years after the welfare initiative discussions, which promised financial security for all citizens post the retirement age.
Current Pension Scheme Facility in Bangladesh
At present, only government employees are eligible for pension and their gross pension per month has more than doubled in the last 10 years. A 5% dividend is added every year to further sweeten the pot. If the pensioners pass away, vulnerable groups like their widows, minor or disabled children get the benefits for life.
However, no such schemers are available for the employees or their families in the private sector of the country. A few formal companies do provide gratuity and provident fund benefits, but those working in the informal sector do not get to avail even this much.
Reason of Universal Pension Scheme Project
This universal scheme promises to bring even the private employees under the pension umbrella. Bangladesh may be a young nation now but this workforce will officially graduate towards the ageing demographic as early as 2030.
The average life expectancy of Bangladesh is 73 years now and is expected to climb up to 80 years within the next 25 years and to 85 years by the year 2075. The number of people in the country who are aged 60 plus are to quadruple between 2020 and 2040 which means that each decade will be burdened with an additional 10 million elderly population.
In the face of this dilemma, the pension scheme has come like a sigh of relief for the ageing. The government considers it their responsibility to look after the people who will go up to live 15, 20 and even 25 years after their source of monthly income dries up and make sure they live dignified, fulfilled lives.
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Bangladesh Universal Pension Scheme Apply Rules Guideline
- Citizens, aged between 18 and 50, will be able to enroll in the scheme using their national identification numbers. Even Bangladeshis working abroad can be included in the programme. Public, private, semi-government and autonomous organizations can also join the scheme.
- From the age of 60, pensioners will enjoy lifelong pension benefits. However, if a pensioner dies before the age of 75, their nominees will receive a monthly pension for the remaining period – up to 75 years of age of the original pensioners.
- If a person dies before completing their constitutions for at least 10 years, the money deposited will be returned to their nominees along with the profits.
- A contributor will be eligible for a monthly pension after making their contributions for at least 10 consecutive years. The pension will be paid against their deposits with profits from the pension fund on completion of 60 years of age of the contributors.
- There no scope for one-time withdrawal of money deposited in the pension fund at any stage. However, the contributor will be able to receive a maximum of 50% of their deposits as loans, which must be repaid along with the prescribed fees. The full amount paid along with the fees will be credited to the pensioners’ accounts.
- The government will give a tax rebate considering the contribution for pension as investments. The money received by the pensioner as a monthly pension will also be income tax-free.
- The government will be able to provide a portion of the monthly contribution to the pension fund as a grant to the citizens below the lower income age or the needy contributors.
- “Employees working in government, semi-government and autonomous organizations will be excluded from the universal pension system until the government issued a separate gazette notification.
- In case of a delayed payment of monthly contributions, the pension account can be kept active by paying the dues along with late fees. The money paid as late fees will also be credited to the contributors’ accounts.
Bangladesh Universal Pension Scheme Apply System
- Citizens whose aged between 18 and 50 will be able to Apply in the scheme using their national identification numbers.
- Even Bangladeshis working abroad can Apply in this programme. Public, private, semi-government and autonomous organizations also can apply.
- National Pension Authority will determine the minimum monthly subscription for the pension.
- After Apply for the scheme, the person need to pay premium at least 10 consecutive years.
- The pension will be paid against their deposits with profits from the pension fund on completion of 60 years of age of the contributors.
Purpose of Universal Pension Scheme Project
The government is expected to bear all associated expenses for the related costs and authorities and will invest the deposited money with a 10% interest on it, in accordance with prescribed guidelines and will therefore aim to maximize its profits.
These investments will mostly be in treasury bills, bonds and profit-making infrastructural development projects which the government hopes will reduce its dependence on borrowing from banks.
The returns that come from these investments will be poured back into the fund. The government also aims to pay into private sector pension funds even though the percentage contribution is yet to be decided.
The government is also expected to pay into the pension funds by reducing its spending on existing social safety programmes like old-age allowance. As more work needs to be done for the scheme to crystallise, amendments and suggestions will be incorporated by and by.
For now, the plan is for the government to give back as much as depositors pay into their accounts but the policy may be modified by observing how other countries operate similarly offered schemes.
Once the entire scheme is up and running, the government will aim to bring in the public service workforce under it as well. The pension scheme will likely be implemented in its full scope by 2025.
In the meantime, those working in the government service sector and those who will join until before the universal pension scheme rolls out will be eligible to receive pensions directly from the government just like before.
Others not eligible to avail this scheme are ‘solvent citizens’ or those who have enough of a retirement nest egg to survive on, as the government only intends to help the marginalized people.
It safeguards the future of the working population of the country and ensures that they stay above the poverty line towards the end of their lives.
It encourages the poor of the country to save money which helps protect them socially and generally increases their propensity to save.
It takes pressure off bank loans from the government and offers another solution for investment and economic growth of the country.
Final Word
As Bangladesh moves from a least developed country to a developing country, and from a low-income economy to a lower middle-income economy, its citizens, some 40% of whom are without pensions, look to the government for increased financial security and overall social welfare.
Universal pension scheme will be a great tool to reduce inequality in income distribution of the economy. Experts feel that this is the right time to introduce such a scheme, in light of the growing elderly population demographic and feel that it is a positive sign that the economy of Bangladesh is being able to think along these lines.
FAQ About Universal Pension Scheme
How to make the universal pension scheme a success?
The operational and administrative costs should be within acceptable levels, so that the pension account holders receive a good return on their money. A robust supervision and monitoring system should be in place to avoid wastage. The beneficiaries should receive regular statements with updates on their income.
How is pension fund calculated?
A pension fund contribution is calculated as 7% of half of the employee’s basic salary, you would use ‘Percentage of Income’ to capture 50% of the basic salary. The 7% would have already been captured when adding the pension fund under Regular Inputs for the pay slip.
How long does pension last?
Pension payments are made for the rest of your life, no matter how long you live, and can possibly continue after death with your spouse. Lump-sum payments give you more control over your money, allowing you the flexibility of spending it or investing it when and how you see fit.
What is universal pension scheme?
A new Universal Pension Scheme may be considered in view of the clarion call of the prime minister on universal social security and global trends, to cater to those not covered under EPS-95 including gig workers and self-employed persons,” the committee said in its report on pension reforms.
How much universal pension People get in Bangladesh?
Any citizen, including expatriate Bangladeshis, aged between 18 and 50 can sign up for the scheme. A beneficiary can receive a monthly pension of Tk 64,776 after the age of 60 and start to contribute towards the scheme with a monthly instalment of Tk 1,000 from the age of 18.
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