Pension products feared to demotivate clients

State pension schemes were not designed by professional pension actuaries, raising concerns that they could increase the government's future liabilities or fail to attract clients.
The National Pension Authority (NPA) launched four pension products-Probash, Progati, Samata, and Surakkha-just ahead of the national election in January 2024.
When pension products are not created by actuaries, there is a significant risk that future payouts might exceed available funds, which could create financial challenges for the government.
Additionally, clients may be discouraged if these products fail to deliver expected returns.
Globally, pension products are developed through extensive actuarial analysis, considering demographic data, mortality and morbidity rates, inflation, interest rates and other economic factors. However, the NPA developed these products internally.
Md. Golam Mostofa, an NPA member, told the Financial Express: "We developed these products with the help of an official who is familiar with the matter."

However, he declined to name the official involved.
Mr Mostofa also said that Bangladesh currently has no professional actuarial firm specialising in pensions.
"For this reason, we did not hire any firm," he said, although international bidding was an option.
He claimed that these are scientific products.
According to insiders, the NPA consulted two actuaries-one based in Bangladesh and another in Australia-though they reportedly did not find the products viable, according to a source with direct knowledge of the matter.
Citing international examples, the source highlighted that in Malaysia, government pension schemes employed over 50 actuaries to ensure product soundness.
"These types of products are much more technical than insurance products," the source added.
Some leading economists also criticised the products, stressing the need for involving experts.
Dr M Masrur Reaz, chairman of the Policy Exchange Bangladesh, told the FE: "This is a highly technical area that requires appropriate professionals, such as pension actuaries, to be engaged."
He suggested that the products should be redesigned. "Fund management and investment experts should also be involved in the process," he added.
Dr. Masrur notes that the interim government is now in the process of restructuring or rebuilding public institutions, saying, "Now is the right time to engage appropriate experts to make these products attractive for both the government and the people."
He said any government action on this issue should adopt best global practices to prevent an increase in government liabilities while ensuring that the products attract people looking to secure their future.
He, however, suggested that bureaucrats should be appointed for overall supervisory roles.
According to recent reports, the interim government plans to strengthen the Universal Pension Scheme (UPS) to create a sustainable social security framework accessible to people from all walks of life.
The previous Awami League-led government introduced the UPS on August 17, 2023, covering citizens aged 18 to 50 with the aim of providing a safety net and monthly stipend to support their expenses.
However, as of October 14, a total of 372,000 beneficiaries enrolled in the four pension schemes: Probash, Progoti, Surakkha and Samata. The government just before its fall in the student movement scrapped the widely-discussed Prottoy scheme, designed for employees of state-owned entities and autonomous bodies, following opposition from university teachers.
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