The National Pension Authority has taken a series of new initiatives to make the Universal Pension Scheme more attractive. These include allowing subscribers to withdraw from the scheme in case of urgent financial need, providing a lifetime pension to a pensioner’s spouse as nominee after the pensioner’s death, and lowering the pension eligibility age from the existing 60 to 55.
The proposals will be presented at a meeting of the National Pension Authority’s board of directors at the Secretariat Thursday. This will be the fourth meeting of the authority’s board. The authority has placed 11 agenda items before the meeting for discussion.
Finance and Planning Minister Amir Khosru Mahmud Chowdhury will chair the meeting. Proposals approved by the board will subsequently be taken forward for implementation by the National Pension Authority.
Currently, four Universal Pension Scheme packages are in operation: Progoti, Surakkha, Samata and Probash. Through these schemes, salaried workers, people with irregular incomes and expatriate Bangladeshis have the opportunity to come under the pension system.
The Universal Pension Scheme was launched on 17 August 2023, taking into consideration around 100 million people across four categories in the country.
According to sources at the National Pension Authority, three years have passed since the scheme was launched. So far, 379,920 subscribers have registered under the four Universal Pension schemes. The total amount deposited by them stands at Tk288.52 crore.
Under the existing pension system, once someone joins a scheme, there is no provision for withdrawing from it. If a subscriber is unable to continue making contributions, the money deposited would effectively be lost. Subscribers had demanded a change to this rule.
A total of 287,224 people have enrolled in the Samata scheme, with deposits amounting to Tk56.85 crore. The Probash scheme, designed for expatriate Bangladeshis, has received the least response. Only 1,171 expatriates have registered under the scheme so far, including 97 women. Their total deposits amount to Tk11.87 crore.
Subscribers say several factors are behind the low level of public interest in the Universal Pension Scheme. Among them are lower returns than bank deposits and the limited immediate benefits available to subscribers before they begin receiving their pensions.
Money may be withdrawn after 5 years
Under the existing pension system, once someone joins a scheme, there is no provision for withdrawing from it. If a subscriber is unable to continue making contributions, the money deposited would effectively be lost. Subscribers had demanded a change to this rule.
A proposal to amend the rule has been included in the agenda for the meeting. It states that after contributing for five years, a pension subscriber who becomes physically or financially unable to continue may, under special consideration, be allowed to withdraw the deposited funds.
Lifetime pension for nominee
A proposal has also been made to provide a pensioner’s nominated husband or wife with a lifetime pension after the pensioner’s death.
The introduction of an Islamic version of the Universal Pension Scheme is also expected to be discussed in the board meeting. Many people do not wish to participate in an interest-based system, and these initiatives are being considered with them in mind.
Under the current rules, a contributor receives a pension for life, that is, until their death. After their death, no other member of the family receives a pension. If a contributor dies before reaching the age of 75, their nominee receives the pension only for the remaining period until the contributor would have reached 75.
Pension from the age of 55
A proposal has been made to set the age at which pension payments begin at 55. Under the current rules, subscribers become eligible to receive a pension only upon reaching the age of 60.
At the authority’s second board meeting, held in May last year, it was decided that contributors enrolled in the pension schemes would be allowed to withdraw 30 per cent of their accumulated funds as a lump sum upon reaching the age of 60. Previously, there had been no provision for withdrawing a lump sum.
Initiative to introduce an Islamic pension scheme
The introduction of an Islamic version of the Universal Pension Scheme is also expected to be discussed in the board meeting. Many people do not wish to participate in an interest-based system, and these initiatives are being considered with them in mind.
There is also a proposal to introduce health insurance. The authority plans to provide insurance coverage in exchange for a monthly premium of around Tk10 to Tk20 from subscribers.
Higher commissions for financial service providers
A proposal has been made to increase the commission paid to institutions involved in registering subscribers for the pension schemes. The commission, currently set at Tk15, is proposed to be raised to Tk25.
The proposals will be presented at the board meeting. We will take the necessary steps and launch the activities in accordance with the proposals approved by the board.National Pension Authority Executive Chairman Md Suratuzzaman
The commission will be paid to banks, the postal department, mobile financial service (MFS) providers and other authorised institutions. Subscribers are registered for the Universal Pension Scheme through these institutions.
Fund proposed to address inflation
The agenda includes a proposal to establish a reserve or contingency fund to address the risks arising from long-term inflation and fluctuations in profit rates.
The National Pension Authority says a decision may be taken to establish such a fund to ensure the long-term financial stability of the pension fund.
National Pension Authority Executive Chairman Md Suratuzzaman told Prothom Alo, “The proposals will be presented at the board meeting. We will take the necessary steps and launch the activities in accordance with the proposals approved by the board.”
How to register
To enrol in the Universal Pension Scheme, applicants must register through the U-Pension website. At the beginning of the registration process, a declaration page appears stating, “I hereby certify that I am not employed by any government, semi-government, autonomous or state-owned institution. I do not receive any benefits from any government or autonomous institution outside the Universal Pension Scheme. I do not receive any allowance under any social security programme.”
After clicking “I agree” at the bottom of the page, applicants can proceed to the second page to begin the registration process. They must select one of the four schemes—Probash, Samata, Surakkha or Progoti. They must also provide their NID number, date of birth, mobile phone number and email address.
Applicants then need to enter the captcha displayed at the bottom of the page and proceed to the next page. After the captcha is submitted, an OTP, or one-time password, will be sent to the applicant’s mobile phone number and email address. Entering the OTP in the form allows the applicant to proceed to the next stage.