Universal pension policy on cards

Draft to be finalised this month

Hasibul Aman

12 July, 2019 12:00 AM printer

The finance ministry is going to finalise a draft of a universal pension policy this month to bring all people under the government’s pension scheme like the developed nations.

A seven-member committee, headed by Additional Secretary of the Finance Division Azizul Alam, is working on the draft which is expected to be submitted to the finance secretary this month, ministry sources said.

Once the draft is completed, private jobholders and general people will be gradually brought under the pension scheme alongside public servants, sources said.

It may take three years to bring the people working in private sector under the pension scheme once the policy is put in place, they added.

“A committee with regard to this is currently examining ins and outs of a universal pension structure. Besides, legal aspects and other experiences are also under scrutiny to prepare a draft policy which will be finalised this month,” a high official at the ministry said.

The government will finalise the policy after holding discussions with other private-sector stakeholders after the draft is prepared, he added.

The government has already formulated a National Social Security Strategy (NSSS) that seeks to bring some 30 million people under social safety net with following life-cycle approach.

The NSSS has chalked out pathways to introduce a universal pension scheme alongside other schemes.

Official data suggest that out of six crore jobholders, 5.80 crore are doing jobs in private sector who have to live with financial hardship after retirement.

The initiative for making the draft of the universal pension scheme came after Finance Minister AHM Mustafa Kamal made a commitment for it in his current fiscal year’s budget speech.

“The beneficiaries of government pension facility are only a fraction of whole population. The government will soon form a universal pension authority to gradually introduce a pension scheme for all people, including those doing job in formal and informal sector,” Kamal said in his budget speech.

Former Finance Minister AMA Muhith also pledged for it in the FY19 budget but so far it has not seen light except for some paper work.

Officials at the Finance Division said preparing a framework of a universal pension scheme is very challenging and it involves huge cost and time.

Indian government has already introduced the system in most of its provinces after introducing it on a limited scale in 2004. Nepal, Bhutan and Sri Lanka are also working on it.

Earlier, a finance ministry committee also proposed a participatory universal pension system under which a pension fund will be created, where jobholders and their institutions concerned should contribute 10 percent of their basic salary each.

The same system will be followed for both public and private sector jobholders and there will be a regulatory authority to look after the fund.

According to analysts, any decision about this should be introduced with private sector’s consent, otherwise any unilateral decision will not yield any result with regard to this.