The “Prottoy Scheme” of the Universal Pension Scheme (UPS) will only be mandatory for employees and staff appointed on or after July 1, 2024, at self-governing, autonomous, state-owned, statutory or similar organisations and their subordinate bodies in line with Section 14 (2) of the Universal Pension Management Act 2023.
Teachers and staff of public educational institutions appointed before June 30, 2024, will keep their existing pension facilities, according to a National Pension Authority (NPA) press release issued Tuesday.
Under Prottoy, 10 per cent of basic salaries received by all employees or a maximum of Tk 5,000, whichever is less, will be deducted and an equivalent amount will be given by their employers, according to the Ministry of Finance.
All funds will be deposited to an account under the National Pension Authority.
On March 13, the Ministry of Finance announced that Prottoy would be introduced to self-governing, autonomous, state-owned, statutory or similar organisations and their subordinate bodies beginning July 1.
Teachers and other employees of the public universities quickly announced their displeasure with the scheme.
On Monday, public university teachers across the country went on a work abstention, halting all academic activities, including classes and exams, declaring that they will not return to classes or conduct exams until the government withdraws the ProttoyScheme.
The strike is being observed under the banner of the Federation of Bangladesh University Teachers' Association (FBUTA).
Classes and examinations, including regular, evening, and professional programmes, both online and offline, were suspended at all public universities, including Dhaka University, Chittagong University, Rajshahi University, Shahjalal University of Science and Technology, Jagannath University, Jahangirnagar University and Khulna University.
Administrative activities, as well as the offices of department chairs, hall provosts, research centres, institutes, central libraries, dean offices, computer labs, and seminars, also remained closed at these universities.
The UPS was introduced on August 17, 2023, with four schemes - Probashi, Progoti, Surokkha, and Somota. Later, the Prottoy Scheme was introduced for officers and employees of all autonomous and state-owned organisations.
Despite the attractive returns promised after a specific tenure, enrolment in the scheme has been slow due to a lack of trust in the funds' returns, according to economists and sector insiders.
Finance ministry clarification
In the clarification on relevant issues of the Prottoy Scheme issued on Tuesday, the finance ministry said that there are currently 403 self-governed, autonomous and state-owned organisations in the country. Among them, around 90 are maintaining the pension system. The remaining organisations are under the Contributory Provident Fund (CPF). Employees of organisations under CPF benefits get lump sum gratuity, they do not get pensions.
As a large number of people in the country, except for government, self-governed, autonomous and state-owned organisations, are out of a well-structured pension, the government has introduced the UPS to build a well-structured pension structure for people of all classes and professions.
The finance minister in his budget speech for FY2024-25 has mentioned that government employees joining on or after July 01, 2025, will also come under the universal pension.
A few more clarifications about the Prottoy Scheme:
- Now, the Unfunded Defined Benefit System pension is in the government pension. As a result, as per requirement, all pension expenditure is met from budget allocations. For launching the Funded Defined Contributory system in pension management, like in other countries of the world, a fixed monthly deposit system has been kept from the salary. In the Prottoy Scheme, the concerned organisation will deduct 10 percent or a maximum of Tk 5,000 which is less of the basic salary from the concerned officer or employee and the organisation will pay an equal amount of money. Then both the amounts will be deposited in the corpus account of the officer or employee.
- Unfunded Defined Benefit pension system increases the financial burden of the government which is not sustainable in the long run. On the other hand, in a Funded Contributory Pension System, a fund will be formed based on contributions received and investment profits, so it is a sustainable pension system in the long term. It should be noted that the Funded Contributory Pension System has been in operation since 2004 in India.
- By introducing a new pension system, it will be possible to gradually bring people from all walks of life into a sustainable social security framework. It will be possible to ensure Financial Inclusion and Inclusive Development.
- If a teacher of a public university is appointed to the same post or a higher post in his/her university or any other university after applying through the appropriate authority, he/she gets service protection and pay protection, so it is not considered a new appointment. In that case, he/she will have the opportunity to remain under the existing pension benefits. Only teachers and staff in public universities who are newly recruited on and after July 1, 2024, will be included in the Prottoy Scheme.
- Although the Universal Pension Management Act mentions getting a pension from the age of 60 years, university teachers will get a pension for life from 65 years as they go on retirement from 65 years. In this case, the government will make necessary amendments to the law.
- Lump grant, PRL and Provident Fund will continue like now.
- To ensure the social security of the participant in the contributory pension system, the government has provided priority to monthly pension, not one-time. For this, the system of gratuity has not been kept, but the system of paying monthly pension several times more than the existing monthly pension has been kept. If Tk 5,000 is deducted from the monthly salary in the Prottoy Scheme and the same amount is deposited by the organisation, after 30 years a pensioner will get a lifetime pension at the rate of Tk 1,24,660 per month. The amount of the total deposit of his/her income is Tk 18 lakh and if he/she receives a pension for 15 years, his/her total income will be Tk 2,24,38,800 which is about 12.5 times his/her deposit. Pensioners who survive for 30 years after retirement will get a pension of about 25 times the amount of their deposit.
- Under the existing system, pensioners get a pension for life. In his/her absence the pensioner's spouse and disabled children get a pension for life. In the new pension system also the pensioner will get a lifetime pension. In the absence of a pensioner, the pension is permissible for the remaining period of 15 years from the date of beginning of the pension for his/her spouse or nominee pensioner. For example, a pensioner gets a pension for five years after retirement and dies, in this case, his/her spouse or nominee will get a pension for another 10 years.
