The much-discussed ‘Universal Pension Management Bill-2023’ has been passed in the National Parliament to bring all the adult citizens of the country under the pension system apart from the government employees. However, a person has to contribute continuously for at least 10 years after joining the public pension scheme to get monthly pension benefits. Apart from this, an opportunity to bring government employees into this pension system by issuing a separate gazette has been kept in the bill. All citizens from the age of 18 years and above to the age of 50 can participate in the universal pension based on the national identity card. Special consideration has been given to covering the pension scheme for people above fifty years. However, to get monthly pension benefits, the concerned person has to pay installments continuously for at least 10 years after joining the public pension scheme. The person will get a lifetime pension from that age after the end of the installment period. Bangladeshi workers working abroad can also participate in it.
The installment rate has not yet been determined. The concerned authority constituted under this Act shall determine it. Installments can be paid on a monthly or quarterly basis. There will also be an option to pay in advance installments. Contributor will get a monthly pension if he contributes continuously for at least 10 years. When the age of the installment payer is 60 years, the money deposited in the fund will be paid as a pension along with the profit. A pensioner will get pension benefits for life. Participation in this pension scheme will be optional until the Government gazettes make it mandatory. If a person dies before attaining the age of 75 years while on pension, his nominee will be entitled to a monthly pension for the remaining period (up to the age of 75 years of the original pensioner). If the subscriber dies at least 10 years before the subscription is made, the deposit will be returned to his nominee along with the profit.
If the money deposited in the pension fund needs to be withdrawn at any stage, the subscriber can withdraw a maximum of 50 percent of the money as a loan on application, which has to be repaid with fees later. The money received from the pension will be free from income tax. Contributions earmarked for pension are treated as investments and are eligible for a tax deduction. In case of citizens below the minimum age limit or indigent contributors, the government can give a portion of the monthly contribution to the pension fund as a grant. The public pension system provides for the participation of government, semi-government, autonomous, or private institutions. In this case, the authorities will determine the share of the contribution of workers and institutions. However, till the government decides, the persons working in government and semi-government or autonomous organizations will be excluded from this pension scheme.
Provision has been made for the formation of a National Pension Authority. This authority will have an executive chairman and four members. The government will appoint them. The bill also provides for the formation of a 16-member board of directors. Its chairman will be the finance minister. Besides, the Bangladesh Bank Governor, Secretary of the Financial Institutions Department, Secretary of the Finance Department, NBR Chairman, Secretary of the Ministry of Social Welfare, Secretary of the Ministry of Women and Children Affairs, Secretary of the Ministry of Expatriate Welfare, Secretary of Ministry of Labor and Employment, Secretary of Posts and Telecommunications Department, Secretary of Prime Minister’s Office, Security and Exchange Commission Chairman, President of FBCCI, President of Employers’ Federation, President of Women Chambers of Commerce will be members. The member secretary of the board will be the executive chairman of the authority. One or more Scheduled Banks prescribed by rule shall act as bankers to the National Pension Fund. The National Pension Authority will be constituted after the publication of this Act in Gazette form. After this, the pilot program of the ‘Universal Pension System’ scheme will be launched on July 1. Initially, any other district of the country including Dhaka will be kept as a model district. The duration of this experimental program will be a maximum of two years. Based on its success, the ‘universal pension system’ will be rolled out across the country in a similar manner within the next two years. But the initiation process will be limited.
After the universal pension system is introduced across the country, it will be kept optional for at least five years. Later it may be made mandatory for all by 2028-2030. At present, only government employees get a pension in the country, but the election manifesto of Awami League promised to bring everyone including private employees under pension. After the formation of the government, Prime Minister Sheikh Hasina also said to introduce this facility for everyone. After that, the legislative process started.
According to the announcement of the election manifesto, the Awami League government has passed the ‘Universal Pension Management Bill-2023’ to bring all the citizens of the country under pension. Out of 18 crore people in the country, 14 lakh people are employed, and the rest are outside. It is said in the bill that the bill will be brought for the backward poor, distressed and helpless people of the country. But in our constitution, Article 15 states that the state shall ensure the basic rights of people – food, clothing, shelter, and education. And under Article 15 (Gha) the needy, distressed and helpless people of the country will get government assistance.
If the universal pension system is introduced, more than eight crore people in the country will come under this system. Till now in Bangladesh, only government, semi-government or autonomous organizations employees get pension benefits after retirement. But the government of Bangladesh has proposed a new law under the pension benefit for all the working people of the country. This universal pension system is designed to provide social security, and government assistance to citizens due to unemployment, sickness, disability, or old age, bringing a sustainable safety net to the aging population.
The average life expectancy of people in Bangladesh is now 73 years. By 2031, more than two crore people will be over 60 in the country. Currently, in Bangladesh, the government gives a monthly allowance of 500 taka to the poor elderly above 65 years of age. However, more than 40 percent of people above the age of 65 do not receive any kind of pension or old-age allowance. If the universal pension program is introduced as an exceptional initiative, a sense of security will be born among the people in the future. The way old people today think about their future, they will no longer have that thought. And for this reason, Sheikh Hasina can be called a people-friendly statesman.
The people of this country were personally engaged in future security. For example, people tried to secure their future by saving small amounts, rearing cattle, buying agricultural land, taking a mortgage on agricultural land, etc., which was the traditional way of securing the future of the common people of the country. There is no pension system for the future security of the people in the country. There is a pension system for government employees only. In the current financial year, the total expenditure of the government in the ‘Pension and Gratuity’ sector is 28 thousand 209 crores, which is 4.7 percent of the total budget. This pension system aims to provide social security for the retirement of 14 lakh public employees in the country. Will the state ensure the social security of only a small number of government employees? Or consider the protection of all citizens!
At different stages of the life cycle, people face various risks, shocks, hazards and disasters. The degree of risk varies from layer to layer. For example, the risk of a sixty-year-old person is more challenging than the risk of an active person. During this time a person is constantly broken down, loses performance, decreases in income, lacks energy, and falls into various handicaps. Social security is absolutely necessary for everyone in the last stage of their life cycle or old age. The government has introduced a universal pension system for the social security of 60-year-old citizens, which is good news for the nation. Demographically, the country is now experiencing a demographic dividend. By 2030, these ten are expected to enter the status of the oldest nations. Currently, the number of elderly people in the entire country is 1.13 crore, which is 8 percent of the total population. In 2025, the total number of senior citizens will be 2.80 crore. In 2050 this number will be 4.50 crore and in 2060 it will be 5.61 crore. In 2050, the rate of the elderly population in the country will be 20 percent. The current average life expectancy of the country is 73 years. This rate is projected to be 80 years in 2050 and 85 years in 2075. The number of seniors is increasing at an increasing rate. Along with this growth, their needs have to be assessed.
There are many political parties in the country. Each group is considered separately as a large social organization. Political parties have different ideologies, philosophies and agendas. The parties present their programs and plans in public. According to the democratic system, the parties form the government and run the state with public opinion. Sheikh Hasina, the chairperson of the current ruling political party, Bangladesh Awami League included in her 2008 election manifesto the issue of bringing the elderly population under a sustainable and well-organized social security framework. In this manifesto, she promised the nation to introduce a national universal pension system. In this context, the issue of introducing a comprehensive pension system for the elderly is included in the National Social Security Strategy. On the other hand, in the Seventh and Eighth Five-Year Plans, proposals for the introduction of the ‘National Social Insurance Scheme’ and ‘Private Voluntary Pension’ have been put in place under the integrated ‘Pension Program’. The current ruling party Bangladesh Awami League reiterated its promise to introduce a universal pension system in its 2018 election manifesto. The monthly pension amount will be free of income tax. The proposed law will mention the National Pension Authority, its functions the authority, the pension governing board, the public pension fund and pension disbursement system, etc.
The government is committed to meeting the needs of citizens. A people-friendly government is always active in providing citizen services in the light of state capacity. Public trust in government depends on welfare programs. The universal pension system is undoubtedly a welfare initiative. A milestone in the establishment of the welfare state. The equitable distribution of wealth is the motto of a welfare democratic state. The government has launched an allowance program for the social protection of marginalized groups including senior citizens, persons with disabilities and widows. The state-wide ‘Universal Pension System’ will be a unique social security initiative of the country.
Hiren Pandit is a columnist and a researcher