7 years ago

New pension provision hits upsetting headwind

Opposition to part pay comes from 'influential' employees who seek full payoff at retirement

Picture used only for representational purpose
Picture used only for representational purpose

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A newly introduced pension system executed from July now faces an upsetting blow amid opposition from 'influential' employees to part payout at retirement, sources said.


A government-approved rule on retirement provides that government employees will have to retain 50 per cent of their total pension and the remaining half they will enjoy on monthly basis.


Before approval for the reform by the Prime Minister they had an option for withdrawing all retirement pension at one go or retaining 50 per cent for getting monthly payment.


The finance division recently met on the matter, and a section of employees believed the government could revert to the previous position following the opposition buy a section of stakeholders.


However, a top official at the finance division told the FE that they were yet to take a decision whether or not take a u-turn over the public pension system.


But sources familiar with the developments told the FE that the government may leave out the section of employees who are vehemently opposing it.


"There were huge debates over it in the meeting and a section of employees said that the government should have taken their opinion before approval," an additional secretary told the FE last week.


A female high official who joined the meeting argued that she remained single and she need pension money at one go as she has none to enjoy the benefits after her passing.


A section of officials from the defence services were learnt to argued that there are many officials who go on early retirement and they need money at a time for making investment in profitable ventures for future.


However, another finance official told the FE that the pension system introduced sometime in 1994 allowing withdrawal of all pension amount at a time does not go with the definition of pension.


"Pension must be for enjoying after retirement on monthly basis," he said, adding that the system approved now is much more progressive and government may save around Tk 8.0 billion a year if the retirees do not take the money at one go.


Prime Minister Sheikh Hasina gave the seal of approval on the revised pension scheme for the retired public servants in November 2016.


Bangladesh pension system, which barely conducts actuary valuation for keeping funds to settle pension, now depends on assumptions for yearly allocation in the national budget.


For such assumptions many times the government gets into trouble while settling pensions and it borrows from different sources to settle pension claims.


There were many examples of a large number of retirements in a year and government predictions being upset, forcing the government to borrow from expensive sources for the payout.


However, an employee is usually paid 90 per cent of basic at the time of retirement.


They receive 50 per cent of their total pension at retirement. And the remainder, another 50 per cent, is enjoyed during the rest of lives through multiplying by 230.


After death of a retiree the spouse enjoys it. If dependants remain minor, she or he will enjoy it until 25 years of their age. But if the first child becomes mentally retarded or so, he/she will be enjoying the perk lifelong.


In addition to the pension, government employees get three festival bonuses and medical allowances. Previously, those who took all pension at one go were eligible for medical allowance and festival allowance.


However, a government employee can opt for pension after 10 years of services, but in such a case, their employee benefit is low.


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