towards ‘universal’ pensions in Bangladesh

The government of Bangladesh plans to introduce a scheme that promises a ‘universal’ pension to everyone who contributes to a pension pot. Those who contribute little will receive little in their old age. Those who contribute nothing will receive nothing. Is this a universal benefit? Not by my definition.

More than 6% of Bangladesh’s 169 million residents are older than age 60. These older persons cannot save much for their old age, as they have already reached old age. Nor can we expect unpaid caregivers or workers in the informal sector to participate in the proposed ‘universal’ retirement savings scheme.

The World Bank (WB) has already shown its interest in funding the project, sources said. ….

This will be a contributory pension scheme under which the beneficiaries will also be eligible for annuity at the time of their retirement, sources informed.

Currently, only two million government employees in Bangladesh are entitled to pension on retirement.

In addition, [about three million] poor people with virtually no means of support in their old age are also provided with a cash allowance of Tk. 500 [USD 6.20] per month. …. However, the rest of the senior citizens, who even regularly paid their income tax during their active life, are not entitled to any pension after retirement. ….

They [experts] also observed that the creation of such a universal pension scheme would also help boost investment in the financial sector.

However, concerned officials admitted that the pension scheme would be a very lengthy process given the large number of people that have to be brought under this initiative.

“It would take at least five years to create necessary infrastructure for the scheme while it would take almost ten years to bring all citizens under this universal pension scheme”, the finance division official said.

Mehdi Musharraf Bhuiyan, “Regulatory body likely for universal pension coverage“, Financial Express, 26 May 2017.

Ten years is an optimistic projection for universal coverage. I am pessimistic and predict that contributory pensions will never cover all citizens. If Bangladesh manages to achieve this with a contributory scheme, it will be the first country in the world to do so.

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