It is mandatory for newly hired personnel in government banks to enroll in the universal pension plan.

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 New recruits in government banks are required to join the universal pension scheme.

It is mandatory for newly hired personnel in government banks to enroll in the universal pension plan.
IMG Credit: Canva 

The pension scheme for workers in Bangladesh's capital market, banking, and insurance industries has undergone significant modifications. This include entities like Investment Corporation of Bangladesh (ICB), Insurance Regulatory and Development Authority (IRDA), Bangladesh Bank, and Bangladesh Securities and Exchange Commission (BSEC).

A notification published in the gazette on March 13 by the finance ministry's division of finance stated that officials engaged by these organizations after July 1st will now be enrolled in the universal pension scheme's new Prattay pension plan.

In addition, all state-run banks and businesses in which the government owns a majority part, like Padma Oil and Jamuna Oil, would be transferring their new hires to the new pension scheme.

Employees who still have ten years or more of service left can choose to transfer to the new pension plan, or they can choose to stay in the current one.

Enrollment in the Prattay scheme will be mandatory for all newly hired personnel of autonomous or self-governing institutions, like Dhaka University, to be eligible for pension benefits under the universal pension scheme.

As of March 14, there were 26,851 people registered in the four schemes that make up the universal pension system: Pragati, Probash, Surakkha, and Samata.

The finance division declared that the goal of the new pension plan is to give workers social security and financial security after they retire.
When asked if Bangladesh Bank will be covered by the notice, National Pension Authority member Golam Mostafa responded that the bank is a legally-established, independent entity. The gazette notification has clarified everything without mentioning any specific institutions. Board of directors of the bank will talk about the matter.

Mezbaul Haque, the executive director and spokeswoman for the central bank, stated that they will now evaluate the effects of the alerts on their new hires in this regard.

A small number of organizations, including autonomous, state-run, self-governing, and statutory ones, currently offer pension services, according to the finance division. As they only receive a one-time gratuity and no monthly pensions after retirement, employees must deal with financial insecurity at this time.

The federation president Nizamul Haque Bhuiyan and secretary general Akhtarul Islam jointly released a statement in which they emphasized that it is unconstitutional to have different policies under a single compensation structure. They called for the announcement to be withdrawn because they believed it was part of a plot to provoke conflict between government and university professors.

Benefit calculations

The finance division states that the total contribution through the Prattay plan will be Tk 900,000 if Tk 2,500 is contributed each month for 30 years. This sum will be matched by the authorities, making Tk 1,800,000. The client will receive a pension of Tk 11.2 million over 15 years of retirement, or Tk 62,330 per month beginning at age 60, if they pass away at the age of 75. As a result, the client's original money gets returned 12.47 times over.

A maximum deduction of Tk 5,000 (or 10% of the client's basic pay, whichever is lower) would be made from their salaries under the Prattay system.

According to the announcement, because pension benefits are available for life, it is anticipated that the amount of pension will rise even more. The amount of the pension each month will increase in tandem with an increase in the rate of return on assets. Deposit rebates on investments will also be provided, and the pension will be income tax deductible. It is supported by a state guarantee and is totally risk-free.

The South Asian Network on Economic Modeling (SANEM) executive director, Selim Raihan, underlined the necessity of the government allocating a suitable budget for pensions. The government won't have to set aside money for pensions until new hires turn 60, which will bring much-needed relief.


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