Ensuring pension for all is a must

Implementation of the ‘Universal Pension Scheme’, something the ruling Awami League had promised in its manifesto for the 11th parliamentary elections, is a remarkable achievement. We welcome the government’s announcement to bring citizens aged 18 to 50 years under the scheme coverage within six months to one year. Those who register for the scheme must pay fees to the pension fund for at least 10 years to get the benefit after turning 60. If someone dies before the age of 75, their nominees will enjoy the benefits. Universal pension is a stream of payments from the state to an individual that starts when someone retires at 60 and continues until s/he passes away. Finance Minister AHM Mustafa Kamal said that the scheme would be introduced for all Bangladeshi citizens, including expatriates. It will be kept optional at the beginning, but will later be made compulsory. He said that the government would form an independent authority to manage the fund and invest it. Profits from the investments will also be distributed among the pensioners.

On February 17, Prime Minister Sheikh Hasina directed the finance ministry to frame a new law on an urgent basis to introduce the Universal Pension Scheme for all citizens over the age of 60. She gave the direction after Finance Division Senior Secretary Abdur Rouf Talukder presented the strategic paper of the Universal Pension Scheme at her official residence Ganabhaban. The premier also gave some directives on the paper based on international experience, the context of Bangladesh and the country’s economic capacity. The need for a publicly-funded, universal pension scheme that will overcome financial miseries among the aged has been felt for a long time in Bangladesh, which constitutionally is a welfare state. In his 2016 budget speech, the then finance minister Abul Maal Abdul Muhit brought up the inclusion of both the public and private sectors in the pension programme. Only about two million government employees are entitled to draw retirement pensions. Recently, service holders of public universities and other autonomous bodies have been added alongside government employees to the pension system. A senior official at the finance division said they had been trying for years to launch the pension scheme. Several acts have to be enacted to this effect, and two authorities will be established after the enactments and before the launching of the universal pension scheme. Officials hope that everything will be completed with regards to launching the pension scheme within the current fiscal year.

We agree with Dr Zahid Hussain, a former lead economist of Dhaka office of the World Bank, that our economy does not have the capacity for our government to contribute equally to all beneficiaries under the Universal Pension Scheme. It will impose an additional burden on the people. However, for their own betterment, people might agree to pay the extra tax as they are already carrying various tax burdens. In that case, if the balance between the beneficiaries’ in and out is maintained, it will be possible to deal with lots of problems. The finance minister has said that the pension funds will be invested at maximum profit. The reality is there is no such thing as maximum profit – all investments are risky. However, if an investment is made in government bonds and bills, it will be risk-free. But everything depends on the methods the authorities follow.

Every year, approximately 80,000 new older persons enter the group of the older persons who, in general, constitute a socially and economically vulnerable group with the basic needs remaining unmet in many cases. By 2050, it is estimated that the number of people over 60 will be approximately equal to the number of children under 14. Currently, 8 per cent of the population are above 60 or higher, and it is presumed that the number will go up to 17 per cent in 2050. The average life expectancy in Bangladesh is now 73 years. The number will go up to 80 in 2050 and 85 in 2075. It means that a working person will live for another 20 years after his retirement in the next three decades but will not have any income at that time. Only the government can and should take their responsibility.