The much-anticipated welfare initiative has made no progress in the last three years
"Children, God, fortune, government allowance and institutional allowance are the support for people in their old age," reads a finance ministry document about the fate of senior citizens in Bangladesh.
After touring India in 2016, a team of finance ministry officials mentioned these five forms of support for aged people at the beginning of their report regarding the introduction of a pension programme for private sector employees.
But six years on, after the then finance minister AMA Muhith announced introducing a pension scheme in the private sector to ensure financial security for all classes of senior citizens, the government is yet to formulate a concept paper in this regard.
Therefore, private sector employees still have to rely solely on children, God and fortune after retiring from their jobs. They do not get any institutional financial support.
The much-anticipated welfare initiative has made no progress in the last three years since the head of the committee set up to formulate a universal pension policy was transferred from the Finance Division, according to officials concerned.
According to the latest Labour Force Survey, the number of employees in the private sector currently stands at 5.85 crore.
Even though a few of those who do formal jobs in the private sector get contributory provident fund (CPF) and gratuity benefits, those working in the informal sector do not get any retirement benefits.
And if they do not have their children beside them, they have to spend the final days of their lives in severe financial crisis and coping with various diseases.
After 2040, when the current demographic dividend will be over, the number of such elderly people will increase several times.
For government employees, the maximum monthly gross pension has more than doubled over the past one decade. On top of this, a 5% increment is being added every year.
Following the death of pensioners and family pensioners, their minor children, unmarried daughters and children with disabilities are getting lifelong pension benefits.
The government in the budget for the current 2020-21 fiscal year has set aside approximately Tk28,000 crore for around seven lakh pensioners. However, there are no institutional financial benefits for private sector employees and for their children after their retirement from jobs.
In April 2014, the then finance minister Abul Maal Abdul Muhith spoke of introducing a pension system in the private sector for the first time during a pre-budget meeting with representatives of non-government organisations (NGOs). In his budget speech in June that year, he made an announcement in this regard and asked the Financial Institutions Division (FID) to finalise the pension scheme.
He reaffirmed his commitment in the following years and announced the launch of a pilot project to introduce a pension scheme for the employees of private banks and corporate organisations in 2018. He also announced introducing a universal pension system from 2021.
But, after the first announcement, two years passed because of a dispute over which department of the finance ministry will run the pension programme.
Over the next two years, a team led by an additional secretary of the Finance Division toured various provinces of India and gave a presentation in 2016 on how to launch the programme.
The initiative came to a halt when the head of the team, former additional secretary ARM Nazmus Sakib, was transferred to the Office of the Chief Controller of Imports and Exports in 2017. He went on post retirement leave (PRL) last year.
Finance ministry officials said no further action is being taken now to launch the private sector pension system.
Earlier this year, an initiative was taken to prepare the concept paper by employing Nazmus Sakib on an outsourcing arrangement, but that did not happen due to the outbreak of the novel coronavirus. Therefore, no one can say when the work will start again.
Pointing out that introducing a pension system for the massive workforce of around 6 crore is a daunting task, the officials said a lot of preparation, including building institutional and technical infrastructure, hiring foreign consultants, has to be done to start work on it.
Even if the work starts now, it will take several years to launch the scheme, they argued.
A pension system will be introduced for private sector employees even if it takes time
Meanwhile, Finance Minister AHM Mustafa Kamal has said a pension system will be introduced for private sector employees even if it takes time.
He told The Business Standard that introducing the pension scheme is a major target of the government in ensuring social security.
"We will introduce a universal pension system. The prime minister also wants this to happen. However, this will take some time," said the finance minister.
After getting the responsibility to finalise the universal pension scheme in 2014, the Financial Institutions Division started work on a feasibility study through reviewing universal pension schemes being run in Australia, India and South Africa.
In the following year, the FID took an initiative to develop a pension scheme for the social insurance and private sectors under the around $100-million "Bangladesh Insurance and Private Pension Market Development" project funded by the World Bank.
It also started preliminary work on conducting necessary surveys, devising a framework and carrying out a pilot experiment to formulate National Social Security Scheme and introducing a private pension system.
The FID planned to launch the universal pension scheme in 2021. As specified in the plan, anyone working in any private organisation for at least 10 years will be eligible for pension benefits.
If work were done according to the plan, all the private-sector employees of the country would be covered under the pension facility from next year and they would be able to enjoy the pension facility from 2032.
In 2015, the Planning Commission asked the FID to send a detailed project proposal. Then the Finance Division said it has experience in this regard as it works with the pensions of government employees. Therefore, the division demanded that the pension system in the private sector should also be managed by it.
After responsibility was handed over to the Finance Division, a committee headed by Nazmus Sakib, at the time Additional Secretary of the division, was formed.
In August 2016, the committee submitted a report on how to introduce pensions for all after its members returned from a knowledge enhancement tour of India. However, committee chief Nazmus Sakib was transferred to the Office of the Chief Controller of Imports and Exports in the following year.
Once the initial work is done, consultants will be appointed from countries which have successfully been managing such pension schemes
Officials of the Finance Division said the issue of introducing a pension system in the private sector will be finalised by appointing Nazmus Sakib as an expert. It has not happened yet because of the coronavirus, they noted, adding that once the initial work is done, consultants will be appointed from countries which have successfully been managing such pension schemes.
Contacted over the phone, Nazmus Sakib declined to comment on the matter.
Nonetheless, he ended his 18-page presentation four years ago with a quote from Surendra Dave, chairman of the Centre for Monitoring Indian Economy (CMIE): "The ability of a society to execute pension reform is a litmus test of the quality of governance, since there is perhaps no other area where reforms are as important, but as lacking in immediacy."