Rules on cards to invest proceeds from scheme for better returns

The government is preparing rules on "pension fund management" to explore investment opportunities of the proceeds from the universal pension scheme launched this month (August 2023).
"We're preparing the rules. After that, there will be a committee that will be empowered to make investment decisions," said Mr. Kabirul Ezdani Khan, additional secretary and executive chairman of the newly formed National Pension Authority (NPA).
He said the committee will consist of financial experts from both public and private sectors and they will prefer risk-free investments. "We've a plan to invest in government treasury bills and bonds."
Mr. Khan was addressing as chief guest at a programme organised by the Metropolitan Chamber of Commerce and Industry, Dhaka at its headquarters in the city.
MCCI President Md Saiful Islam presided over the programme, attended by a number of people mostly working at the human resources management departments of different private firms.
The government securities are believed to be risk-free as long as the government does not default. However, such borrowing instruments offer conservative yields as they are used as a benchmark for other rate-settings in the financial market.
The NPA chairman said the pension funds in the future would be used to invest in mega projects like Padma Bridge with higher return on investment.
On the higher inflation, the chief of the National Pension Authority said that the existing high rate of inflation would not remain high in the long run.
He, however, did not respond to questions relating to the 'time-value of money' and other technical issues. Actually such pension fund-related products are usually developed by actuaries who consider a number of economic and demographic assumptions. The Actuaries work with future risk-related issues, he added.
MCCI President Mr Islam said that the private entities may think Progoti scheme for their employees as the well-structured companies have been maintaining both contributing provident fund and gratuity for their employees as the protection tools.
"We, as the private entrepreneurs, may think about the Progoti scheme, which is equally contributed by the employees and employers. Then, we may discontinue the gratuity option in the private enterprises."
However, deputy secretary of the finance division Sabbir Ahmed said the civil servants get many benefits after retirement like 18-month salary encashment and pension under a defined system.
They are also entitled to a general provident fund with high interest and gratuity, he said, comparing the benefits of the universal pension and the government pension.
Meanwhile, the pension authority explained that those who have enrolled for the scheme would be able to withdraw 50 per cent of their deposits in case of any emergency. "But, they will have to repay it to remain entitled to get a pension."
The authority chairman said the pension is a protection and added that they will be eligible for getting a monthly pension only at the age of 60. He said that housewives and sons/daughters below 18 years may also enroll in the "Surokkhya" schemes.
However, the MCCI president said that the authority may consider offering premiums to the ones who would pay subscriptions for 12 months in advance.

jasimharoon@yahoo.com