Desk News :: The government is set to introduce on Thursday four schemes under the universal pension scheme without disclosing the fund management plans that, according to economists, have exposed the hurriedness and weakness of the overall programme.<\/p>\n
Golam Mostafa, acting member secretary of the pension scheme authority, told New Age on Tuesday that the fund management plan was underway.<\/p>\n
\u2018It will be made public soon,\u2019 he said, stating that the government would bear the overhead cost of the fund authority while contributions from the subscribers would be invested as per plans.<\/p>\n
He said that they would continue to troubleshoot since they were going to begin the schemes experimentally.<\/p>\n
The schemes are Probash, Pragati, Surokkha and Samata which will be available for monthly subscription fees of Tk 1,000\u201310,000 for citizens aged between 10 and 42 years.<\/p>\n
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\nEconomists said Pragati, Samata, and Prabashi were basically contributory schemes, as the government would not share the subscription fees of those schemes.<\/p>\n
The contribution from the government to the monthly subscription fee under Surokkha, designed for low-income groups, bears some aspects of the universal pension schemes, they said.<\/p>\n
Pragati has been designed for formal private sector workers and employees, but according to the rules, employees will have to bear the full subscription fee in case the employers fail to provide half of the monthly contribution.<\/p>\n
Finance ministry officials recalled that the private sector did not show any positive response to a move by the former finance minister, AMA Muhith, to engage in the pension scheme in 2014.<\/p>\n
Economists said that the absence of a plan regarding the management of the pension fund and any detailed projections relating to the targeted participants exposed the weaknesses of the much-talked-about schemes.<\/p>\n
They said that the management of the fund was a vital aspect of the pension fund globally.<\/p>\n
People will be less interested in such an initiative unless the government clears the fund management plans, said Ahsan H Mansur, executive director of the Policy Research Institute.<\/p>\n
He also said that there had been hurriedness in the overall process.<\/p>\n
The pension authority has already calculated monthly returns, which will be between Tk 1,530 and Tk 3,44,655, according to the rules published by the finance division.<\/p>\n
It is easy to make a calculation, but the management of funds by investing those in risk-free instruments is very challenging, said Ahsan H Mansur while referring to the shortage of investment areas in the country.<\/p>\n
The option to invest in stocks was unlikely to be very encouraging for the government since the country\u2019s share market could not recover from the collapse in 2011, rendering at least 14 lakh new entrants to the market penniless.<\/p>\n
The bond market\u2019s function is limited within banks, and the return from bonds is not more than 8 per cent. Moreover, high inflation has made an investment in commercial banks almost a zero-sum game.<\/p>\n
Economists said that the pension scheme authority would face a big challenge in attracting workers and employees from the informal sector, which accounts for around 80 per cent of the workforce.<\/p>\n
They receive their wages or remuneration in cash and spend their full income on daily basic needs, they said.<\/p>\n
Besides, the pension scheme authority faces challenges in making suitable applications to maintain the collection of funds, too, said Centre for Policy Dialogue distinguished fellow Mustafizur Rahman.<\/p>\n
Given the track record of the government agencies, it will be vital for the authority to stay away from political influences in decisions and win the confidence of the participants, he said.<\/p>\n
He added that the decision-making process of the country\u2019s financial entities was often politicised.<\/p>\n
Economists, however, said the introduction of the pension schemes was imperative for the country\u2019s transition from the least developed countries in 2026.<\/p>\n
Like other developing economies, the country is facing new challenges with the increased number of senior citizens, individual families, the employment crisis, the change in average life expectancy, and others, they said.<\/p>\n
They also said that current welfare activities for elderly citizens under the social safety net programme were insignificant and were marred by targeting errors.<\/p>\n","protected":false},"excerpt":{"rendered":"
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