Universal Pension Scheme: How to implement

Mamun Rashid

23 Aug 2023 07:52 AM । Update: 23 Aug 2023 20:30 PM

Mamun Rashid, Economic Analyst

I am sure that the Universal Pension Scheme's objective is fair. Abul Maal Abdul Muhith, the former finance minister, brought up this subject probably during pre-budget discussions for the 2012–2013 fiscal year. Later, when Mahbub Ahmed was the finance secretary, the finance division started working on this. It slowed down in the middle but picked up speed under the current finance secretary's leadership. The finance division, finance minister, and head of government are deserving of appreciation for launching the first universal pension program in the country on Thursday last.

This initiative's stated objective is to enroll around 10 crore people from the country's four socioeconomic classes in the universal pension system. Four different schemes make up the initial basis of this pension method. They go by the names Probash, Pragati, Surokkha, and Samata. Samata program has been introduced for the low-income people, Probash for Bangladeshis living abroad, Pragati for those in the private sector, and Surokkha for the people who work for themselves as rickshaw drivers, farmers, laborers, blacksmiths, potters, fishers, and weavers are just a few examples of the self-help programs available. However, by providing reasonable cause, any subscriber may change the plan.

There are plans about the launching of two further programs, one for the working class and the other for students. But if we're talking about a precise time frame, it may be stated that starting in 2035 or 2041, employees of state-owned and autonomous organizations will also be eligible for the universal pension plan. After enrolling in the program, a subscriber will begin receiving lifetime pension benefits at the age of 60. However, if the contributor passes away, the pension will go to his or her nominee or nominated heir. In this case, the nominee can take their pension till the age of 75 years of the contributor.

Pensions provide stability for one's financial future after leaving the workforce. In this case, only government employees are eligible for this benefit; employees of the private sector are not. Low-income people, small business owners also fret about their future financial stability once they quit working. If transparency and accountability can be guaranteed throughout the entire process, the government's activities in establishing the Universal Pension Scheme are unquestionably praiseworthy and will serve as a glaring example of how to address the resulting socioeconomic imbalance.

In the meanwhile, the Universal Pension Scheme Rules have been issued. Public Pension Authority has been established. A new website called "Upension" has also just been unveiled. On this website, anyone can join up for the pension plan. In this case, each person will receive a unique ID number. The newspapers’ reports said that the national population between the ages of 18 and 50 is eligible to enroll in the universal pension program. At age 60, they will also start earning a lifetime pension. Later on, the option to enroll people over 50 in the pension plan was made available, even though it wasn't initially taken into consideration. They will start receiving benefits from the pension after ten years of uninterrupted contributions.

Contributions to this program can be made through credit card, debit card, online banking, mobile financial services, or scheduled bank deposits. Subscriptions can be made without incurring any fees throughout the next month. However, if more time has passed, a late fee of one percent per day will be charged. In the event that subscriptions are not paid for three consecutive months, the pension account will be suspended. It will cease operations if all dues are not paid.

The subscriber may take out a loan for personal and family medical costs, building projects, home repairs, and child marriages using half of the money they have given to the fund. Additionally, the necessary charge must be paid, and it can only be paid in a maximum of 24 installments. The repayments will be credited to the account. No new loans can be applied for while an existing loan is active. The Mercer CFA Institute Global Pension Index (MCGPI) includes 44 countries. Singapore, Australia, the Netherlands, Denmark, Israel, Finland, Australia, Norway, and Sweden are among the nations on the top positions of the list. The name of Bangladesh was absent from the list. However, following the inauguration of the project on Thursday, Bangladesh was added to the list of nations providing universal pensions.

The introduction of a universal pension program for the first time with the intention of establishing a welfare and savings state is unquestionably remarkable, as was already mentioned. The problems government retirees face in receiving their pensions, however, raises doubts about whether everyone will participate in the suggested program. As a result, there is no alternative way to ensure transparency and accountability over the whole process of the program. I think this program will be popular if procedures can be created to withdraw pensions at due time while still ensuring the security of the common people's finances. Effective fund management and relatively attractive investment returns should also be considered.

The decision to implement this program actually came at a time when the country's financial sector is in crisis, despite the fact that it has been under consideration for a long time. Concerns have also been expressed about the reserve issue and the stagnation in investment. As a result, in the current atmosphere, the pension scheme will surely face challenges. However, a massive effort must be made to guarantee the program's success. The involvement of financial institutions in this endeavour should be significant.

The stability of the common people's finances will rise if this initiative is successful. But first, it must be shown that the enterprise has been successful overall. However, since the process is virtual or online, strengthening the website's or platform's technological security measures has to be a major priority.

Writer: Mamun Rashid, Economic Analyst

The column was published in the print and online editions of The Daily Samakal and has been rewritten for the English version by Mohammed Humayun Kabir, Senior Sub-Editor.

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