The Finance Division of the Ministry of Finance is set to roll out a Tk 39.65-billion project to strengthen the Universal Pension System (UPS), with around 76.92 per cent of the funding expected to come from loans from the Asian Development Bank (ADB), officials said.
The project, titled "Strengthening Universal Pension System (SUPS)", has been proposed for inclusion in the Annual Development Programme (ADP) for fiscal year 2026-27.
A preliminary development project proposal (PDPP) has already been submitted to the Planning Commission.
Officials say the initiative aims to build institutional capacity and infrastructure for the National Pension Authority, including the construction of office buildings on 36.32 decimals of land in Dhaka's Tejgaon Industrial Area.
It will also support the development of human resources, financial analysis systems and other operational frameworks needed to run the pension scheme effectively.
According to officials at the Economic Relations Division (ERD), the ADB has given preliminary consent for funding and has earmarked $100 million for the project in its pipeline.
Once the project is included in the ADP, negotiations will begin to secure total financing of $250 million.
The move comes at a time when enrolment in the Universal Pension System has slowed significantly, raising concerns about public interest and confidence in the programme.
Since its launch in August 2023 with four schemes -- Samata, Pragati, Probash and Surokkha -- the system has attracted around 0.38 million subscribers. Total deposits across the schemes have reached Tk 2.42 billion, officials said.
However, after an initial surge of about 0.3 million registrations within the first 10 months, enrolment has largely stagnated in recent months.
Economists have questioned the need for large-scale investment in the system given the relatively low participation.
They cautioned that if pension contributions are not managed profitably, both the pension fund and the planned infrastructure could become a financial burden for the government.
The proposal, however, argues that strengthening the pension system is essential for improving public financial management and ensuring long-term social protection.
It says the project will provide the institutional and operational backbone needed to make the system effective and sustainable.
Officials noted that the Planning Commission had granted in-principle approval to the PDPP in July 2024, which was later forwarded to the ERD for further processing.
Initially, the total project cost was estimated at around $325 million, including $250 million from the ADB and $75 million from the government.
However, based on the currently available $100 million financing, the project cost may be revised downward to about Tk 14.64 billion, including $20 million from the government.
To finalise the Development Project Proposal (DPP) and secure ADB financing, a feasibility study will be conducted with technical assistance from the lender, officials said.
In a recent letter, the Finance Division urged the Planning Commission to include the project in the unapproved list of the ADP for FY2026-27 on a priority basis to ensure timely implementation.
Despite the government's push, concerns remain over the system's long-term viability.
Dr Zahid Hussain, former lead economist at the World Bank's Dhaka office, said the project may not be a priority at a time when fiscal discipline and austerity have become pressing concerns.
He said low participation in the pension scheme reflects a lack of public confidence rather than infrastructure constraints.
"People's low participation is not due to inadequate infrastructure or the pension authority's capacity. It reflects a lack of trust and confidence in the returns on their savings," he said.
Dr Hussain suggested that rebuilding public trust and improving returns should be prioritised before committing to large-scale investment in infrastructure for the pension system.
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