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JS  Session Begins Today

Budget likely to see first ever private sector pension scheme

Published : Tuesday, 11 June, 2019 at 12:00 AM  Count : 1410

The government is likely to introduce a pension scheme for all private sector job holders both in formal and informal payrolls in the upcoming budget for 2019-20.
The government looks forward to implementing the scheme within three years.  
The Finance Minister AHM Mustafa Kamal will give a guideline on the scheme in his budget speech with detailed framework about it, insiders said.   
The far reaching move is coming in the first budget of the third Awami League government in a row after forming the government in January this year following national election victory in December 30.  
The Jatiya Sangsad (JS) will go into budget session from today. The Finance Minister will place the budget, which will be his first budget in the House on June 13.
It will be the third session of the 11th parliament. The first session of the 11th parliament began on January 30.
The Finance Minister will unveil the upcoming budget for 2019-20 at a cost of Tk 5, 24950 crore which will be 13 per cent bigger than this year's budget. It includes next year's annual development budget of Tk 2, 02721 crore.
Habibur Rahman, Additional Secretary of the Finance Ministry said the private sector pension scheme will be visible in the new budget.
In this case, the budget will give guidelines on how the pension seekers will deposit money as investment in the specially created fund.
They will get dividend from such investment and if everything works well the government would go for formally introducing the pension scheme in three years.
He said the government can use the money to buy government  bonds or may use it as investment in the capital market.
In this case the fund will get larger and dividends to be received by pensioners from it after 20 or 25 years.
He said the government is considering fundamental change to the existing pension system. It wants to introduce a contributory scheme for public servants as well who will join in it in future.
"We plan to introduce it in phases under an integrated government-run framework, a comprehensive pension scheme for all including the self-employed as well as those formally or informally employed in semi-government organisations and the private sector."
Before this, the former Finance Minister AMA Muhith had announced in 2016-17 budgets that the government was planning to introduce a pension schemes for private sector jobs before 2019.
He said, "About a pension system for the private sector…I don't want to spell out any detail right now. It should be incorporated in the social safety strategies," Muhith had said on that occasion.
Muhith also said a 'contributing pension scheme' can be introduced at least for industries that were 'organised.' Both the employees and employers can contribute to such fund.
According to the Ministry of Finance, a package structure will be created for the private pensioners like government pensioners system.
There will be several categories of pensioners. At the end of the month, they will pay the money to the account. However, if a person cannot pay the pension fees for 6 months, then he cannot remain in the system.
The Finance Ministry wants to ensure universal pension benefits within 3 years. In the upcoming budget, a framework will be presented how the funds will be received, how an authority will be created and in what sectors investment of the money be made.
It will also make clear what type of job holders will be eligible for private sector pension, the official said.   
According to sources, there are some people on retirement from formal employment sector who receive some benefits as pensioners but how people from informal sector can benefit from the pension scheme is not yet clear.
The ministry officials said an inclusive and robust pension scheme was now the demand of the day and it must be met. Moreover, due to urbanisation, the number of nuclear families is also on rise increasing future risks of financial and social insecurity.
The official said they are preparing to bring all pension-holders under the scheme but the process would take a little time for integrating over 600,000 pensioners.
He said the central bank had earlier assured of giving all services in this regard.

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