The National Pension Authority has taken an initiative to introduce six new facilities aimed at making the Universal Pension Scheme more attractive to subscribers.
The proposed enhancements include allowing fund withdrawals under special circumstances after five years of contributions, providing a lifetime pension to the spouse of a deceased pensioner, lowering the pension age to 55, introducing an Islamic pension framework, providing health insurance and increasing registration commissions for partner institutions.
The proposals will be presented on Thursday at the fourth meeting of the Board of Directors of the National Pension Authority at the Secretariat.
Finance and Planning Minister Amir Khosru Mahmud Chowdhury will preside over the meeting, which has 11 agenda items. The proposals approved by the board will subsequently be implemented by the National Pension Authority.
Current standing and exit terms
Four schemes are currently operational under the Universal Pension System: Pragati, Surokkha, Samata and Probash.
Introduced on 17 August 2023 to cater to approximately 10 crore (100 million) people across four categories in Bangladesh, the system has registered 3,79,920 subscribers across the four schemes nearly three years after its launch. The total amount deposited by subscribers stands at Tk288.52 crore.
Under the current framework, subscribers cannot exit a scheme once enrolled, creating difficulties regarding deposited funds if they cannot continue making contributions.
A proposal has therefore been put forward to revise the rule, allowing subscribers who become physically or financially incapacitated after five years of contributions to withdraw their deposited funds under special consideration.
Lifetime pension for spouse, lower age threshold
The board will also consider a proposal to provide a lifetime pension to a pensioner’s nominated husband or wife following the pensioner’s death.
Under existing regulations, subscribers receive pensions until their death, but other family members do not receive regular pensions afterwards. However, if a subscriber dies before turning 75, the nominee receives the pension for the remaining period until the subscriber would have reached 75 years of age.
The new proposal also recommends lowering the pension disbursement age from 60 to 55 years.
This follows a decision taken at the National Pension Authority’s second board meeting in May last year, which allowed subscribers to make a lump-sum withdrawal of 30 per cent of their deposited funds upon reaching 60 years of age.
Islamic pension, commission hike and contingency fund
An Islamic version of the Universal Pension Scheme has also been proposed to cater to individuals seeking non-interest-based options.
The authority has also proposed increasing the registration commission for authorised financial service providers, including banks, the postal department, mobile financial service (MFS) providers and other approved institutions, from Tk15 to Tk25 per client registration.
To address risks associated with long-term inflation and fluctuations in profit rates, the meeting agenda includes a proposal to create a reserve or contingency fund to ensure the long-term financial stability of the pension fund.
