The universal pension will come into effect from July next year

The long-awaited universal pension scheme will take off in July next year. All citizens between the ages of 18 and 50 will be entitled to the benefits of moving.

The Ministry of Finance plans to make a large number of citizens benefit from the pension scheme before the next national elections scheduled for December 2023.

Finance division officials say they have formulated a roadmap to implement the private sector pension scheme. Work is now underway around piloting the system from next March.

The division has already drafted a bill to create a supervising body for the pension scheme and has sought advice from relevant ministries.

The bill was finalized on Monday at an inter-ministerial meeting chaired by Principal Finance Secretary Abdur Rouf Talukder.

“The bill will be presented to the cabinet for approval later this month. If approved, it will likely be passed as a bill in the next budget session of parliament,” said a responsible for the finance division.

The Ministry of Finance plans to establish the Pension Supervisory Authority as soon as possible. Different pension products will be prepared in January-February after appointing necessary manpower by December.

Two ministry officials, speaking on condition of anonymity, told The Business Standard that the government is now focusing on two issues: first, dealing with the effects of the Russian-Ukrainian war and second, introducing a pension system full-fledged universal from next July. year.

For now, all citizens except government employees between the ages of 18 and 50 can enroll in the universal pension scheme and pay a fixed monthly contribution, as low as Tk 100, to the pension fund. . Under this scheme, registrants will benefit from the facility from the age of 60 until their death.

A number of questions regarding the bill were raised by various departments during the interdepartmental meeting. For example, a civil servant asked the finance secretary what the pension system would be for a citizen who enters the civil service at the age of 24 after joining the universal pension scheme at the age of 18. years.

Will they be included in the existing pension system for civil servants or will they remain in the universal pension scheme? And if they come under the state pension system, what will happen to their six-year contributions to the universal pension fund?

“We haven’t thought of that yet. Hopefully these issues will be clarified in the universal pension rules,” the finance secretary told the meeting.

According to the bill, Bangladeshis working abroad will also be able to participate in the universal pension scheme. Under this scheme, prospective retirees can pay contributions on a monthly and quarterly basis. It will also be possible to pay in advance and in installments.

Citizens can open pension accounts based on the information provided on their national identity card. A person will be eligible to receive a monthly pension if they pay fees for at least 10 consecutive years. The pension will be granted at the prescribed rate against the deposit as well as accrued dividends once they reach the specified age, 60 years. A person will then receive a monthly pension until death.

A person’s nominee will be entitled to his monthly pension if he dies before age 75 and will receive it for the remaining period.

Additionally, if a person dies before fulfilling their 10-year fee-paying quota, the deposit will be returned to the applicants along with the profits.

There will be no possibility to withdraw the money deposited in the pension fund all at once, but 50% of it can be taken out as a loan, which must be repaid with interest.

The pension deposit will be considered as an investment and will benefit from a tax allowance. And the monthly amount that retirees will receive will be completely exempt from income tax.

The government will assume the expenses associated with the administration of pensions and other related costs. The regulator will invest the money deposited in the fund in accordance with prescribed guidelines and strive to maximize profits.

In April 2014, then Finance Minister Abul Maal Abdul Muhith first discussed the introduction of a private sector pension system during a pre-budget meeting with government officials. non-governmental organizations.

During his budget speech in June of that year, he made an announcement to this effect and asked the Financial Institutions Division to finalize the pension plan.

He reaffirmed his commitment in the following years and announced the launch of a pilot project to introduce a pension scheme for private bank and corporate employees in 2018. He also announced the introduction of a universal retirement from 2021.

But after the first announcement, two years passed due to a dispute over which department of the Ministry of Finance would manage the pension scheme.

Over the next two years, a team led by an additional secretary from the Finance Division visited various states in India and gave a presentation in 2016 on how to launch the program.

The initiative came to a halt when the team leader, former ARM Additional Secretary Nazmus Sakib, was transferred to the Office of the Chief Comptroller of Imports and Exports in 2017. He went on pre-retirement leave (PRL) in 2019.

In 2020, an initiative was taken to prepare the concept paper by employing Nazmus Sakib under an outsourcing agreement, but it did not work out due to the novel coronavirus outbreak.

Stressing that the introduction of a pension system for the massive labor force of around six crore is a daunting task, the officials at the time said that many preparations, including the building of institutional infrastructure and techniques and the hiring of foreign consultants, had to be done to work there. begin.

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