Universal Pension revamp planned: Spouse to get lifetime benefit

Md Suratujjaman, executive chairman of the National Pension Authority, told The Business Standard that several proposals, including lifetime pension benefits for the spouse of a deceased pensioner, would be placed before the board meeting to boost public interest in the universal pension system.

If approved, the proposals could be implemented within the next one to two months after amendments to the existing regulations, he said.

Slow progress

The government launched the Universal Pension Scheme in August 2023 to bring the growing elderly population under a sustainable and organised social security system, considering the rise in life expectancy and the expected increase in the dependency ratio as the working-age population declines in the future.

However, the scheme has failed to generate sufficient public interest, partly because its returns are considered less attractive than bank deposit interest rates, while other benefits have also not been adequately provided to subscribers.

After three years, only 3,79,920 people have enrolled in the four schemes, contributing a total of Tk288.52 crore.

Of them, 2,87,224 people have enrolled in the Samata scheme for people living below the poverty line, contributing Tk56.85 crore.

The government had also sought to bring expatriate Bangladeshis under the universal pension system, partly in view of the country’s dollar shortage and to strengthen their social and economic security.

But the expatriate scheme has attracted the fewest subscribers, with only 1,171 people enrolled, including 97 women. Their total contributions stand at Tk11.87 crore.

More benefits planned

Against this backdrop, the government is planning to introduce a range of additional benefits and make enrolment in the Universal Pension Scheme mandatory for employees in various sectors, including officers and employees of private banks.

Another proposal to be placed before the board is to reduce the age at which subscribers become eligible for a pension from 60 to 55.

Under the existing rules, a person enrolled in the Universal Pension Scheme starts receiving a monthly pension at the age of 60.

If the pensioner dies while receiving the pension, the nominee is entitled to receive the monthly pension at the same rate until the pensioner would have reached the age of 75.

In contrast, the spouse of a government pensioner is entitled to a lifetime pension after the pensioner’s death.

To encourage more people to join the scheme, the National Pension Authority is therefore proposing to replace the nominee-based benefit with a lifetime pension for the deceased pensioner’s spouse.

Loan and exit facilities

The Universal Pension Act allows subscribers to take a loan against a portion of their accumulated contributions when necessary, with the interest on the loan supposed to be credited to their own account.

However, the National Pension Authority has not yet introduced the loan facility. It is now planning to introduce and maintain the facility.

Under the existing rules, if a contributor dies before completing 10 years of contributions, the accumulated amount, along with profits, is to be returned to the nominee.

The scheme, however, does not currently provide an exit facility for subscribers.

The National Pension Authority is planning to allow subscribers who have contributed for at least five years to withdraw the entire accumulated amount and exit the scheme if they become physically or financially incapable of continuing, subject to the authority’s special consideration.

Insurance and Shariah-based scheme

Although a decision has already been taken to introduce insurance benefits under the Universal Pension Scheme, the National Pension Authority has yet to implement them.

A draft insurance plan for pensioners has already been prepared and sent to the Financial Institutions Division of the Ministry of Finance.

A nominal premium of Tk10-20 may be charged to beneficiaries for health insurance coverage, Md Suratujjaman said.

The government is also considering introducing a Shariah-based version of the Universal Pension Scheme as part of its efforts to make the system more attractive to potential subscribers.

Officials said the insurance plan would be implemented if it receives approval at tomorrow’s board meeting.