Analysing the Universal Pension Management Act 2023

Social safety net programmes to protect the vulnerable population are not a new concept. However, in the context of Bangladesh, the Universal Pension Management Act 2023 is quite a novel (and laudable) initiative. In this write-up, we will focus on the important aspects of the Act as well as compare it with the International Labour Organisation's (ILO) multi-tier pension model.

The essential purpose of the Act, according to the preamble, is to create a sustainable and well-organised safety net for the elderly population of the country. Firstly, section 14(1) mentions that any citizen of the country, including expatriates, can choose to participate in the scheme as long as he is aged between 18-50 years. Even those aged above 50 years, can participate in the scheme under special considerations and will start receiving the monthly pension after contributing (providing 'chada') for at least 10 years (section 14(1)(a)). However, section 14(2) has excluded from the scheme those who work at governmental, semi-governmental, or autonomous institutions, until a notification in the official gazette is published by the government.

Secondly, another requirement for availing the benefits is that the pensioner must contribute consecutively for at least 10 years before receiving the monthly benefits as per section 14(1)(b). Section 14(1)(l) further explains that if a pensioner dies before contributing for at least 10 consecutive years, the nominee will receive the money contributed thus far with interest.

Thirdly, generally, the pensioner will start receiving the pension benefits after he turns 60 and will continue to receive the same until he dies. However, in case he dies before turning 75, his nominee will continue to receive the benefits until the pensioner would have become 75 if he were alive (section 14(1)(k)).

Additionally, if a pensioner wants to withdraw the money at once, section 14(1)(m) provides that he can take a loan of, at best, 50% of the deposited money and pay it back with fixed fees. Another interesting fact about the monthly pension is that no tax needs to be paid on it (section (1)(n)).

Currently, four packages have been launched – Progoti, Surokkha, Samata, and Prabash. The packages are for private sector employees, self-employed and informal sector workers, people living below the poverty lines, and expatriate Bangladeshi workers, respectively. The amount of monthly pension that will be given depends on which package the pensioner picks or qualifies for, the amount of monthly contribution (chada), and for how long he contributes.

Although such an initiative is certainly applaudable, it is not without concerns. According to ILO's recommendation, a multi-tier pension system, which is different from that of ours, is ideal because it incorporates within the safety net those people who cannot be expected to make any monthly contribution. Such a plan suggests, amongst others, that all persons, irrespective of their contribution, shall be given at least some pension benefits. This way the prime objective of such schemes can be truly realised.