As the nation moves towards middle income graduation in 2026, the government has taken the ambitious step towards a key missing milestone that would bring its citizens under a most crucial safety net - universal pension scheme (UPS). The scheme that provides an opportunity for all citizens aged between 18 and 50, including expatriate Bangladeshis, to participate in a programme that will ensure financial security after reaching retirement age. Till now, only government and semi-government institutions provided pension schemes for their employees. Now, anyone can participate in this scheme and reap the benefits. Participants, according to newspaper reports, may draw annuity from four schemes for latter-day financial security.
It is an all-inclusive project that will allow for different income groups to participate, from job holders to the self-employed to low-income group members. It allows for companies to enroll its employees under the scheme in annual installments. Most crucially, it gives meaningful sustenance to the increasing number of elderly people in the country. Reportedly, the number of people aged above 60 years will increase to 31 million by 2041. Providing income security for some 100 million people in the country is certainly one of the most ambitious projects for the government. And it is a step in the right direction.
The four segments Progoti, Probash, Shurokkha and Samata of the scheme provide different packages from Tk 1,000 to Tk 5000 monthly installments. One package, the Samata, provides for equal contribution by the would-be pensioner and the government. This is aimed at the very lower end of earners such as day labourers including rickshaw pullers. However, Samata participants will be excluded from receiving benefits under the government safety net programmes. It remains to be seen whether this will act as a dampener for participation in the scheme.
On paper, the scheme look very good. The government is setting up a regulatory body titled National Pension Authority to oversee its rollout. The big question about UPS is to what extent is it going to be feasible. Needless to say, the scheme will provide much needed funds for the government to continue its development work, but precisely how these funds will be invested remains a question. At the end of the pension scheme tenures, monthly installments will have to be paid back to pensioners and that can only happen if the monies deposited over the years - a portion of which the State will invest in long term securities to reap the necessary benefits to cover these expenditures down the line.
It is hoped that the pension authority will be wise to manage this fund and the right mix of investments will go into treasury bills, bonds and other profit-generating infrastructure development projects because as stated before, the benefits accrued from these investments will form the backbone of repayments after pensioners reach retirement age. Again, one should realise that once the government embarks on the UPS path, its many different social safety net programmes like old-age allowance will be reduced as people enroll into the various schemes.
All said and done, rolling out UPS for such a massive population remains a gargantuan task. Providing seed funding to kick-start the programme will be daunting and it remains to be seen whether other development projects will face fund-cuts for this. Recent cyber-attacks on government institutions have laid bare their technical inadequacies. Private information is not private anymore. Then there is the question of creating separate bank accounts for participants and then collecting contributory amounts. All this pose serious challenges. It would be judicious for the pension scheme authority to addresss effectively the challenges that might come forth.
