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The Sustainable Development Goal 8 is committed to "decent work and economic growth", meant to ensure fair wages and social protections for the working-class people by 2030. The Eighth Five-Year Plan (July 2020-June 2025) of Bangladesh provides for the extension of existing intensive social-security plan for the people at large while eliminating poverty and narrowing inequality. The superannuation plan can be a good option for materialising the commitment enshrined in the Sustainable Development Goal 8 and the Eighth Five-Year Plan (July 2020-June 2025).
Decent work and economic growth under goal 8 include workers' financial security, access to financial services such as pension, gratuity, provident fund, group insurance and other social-safety-net plans. We have most of the financial-security plans for government workers and employees such as pension and gratuity. But the private sectors, NGOs, and informal sectors have been facing huge challenges to provide financial security for their workers. Thus, the private sector remains vulnerable during pandemic or any kind of economic shocks or recession. Countries like Australia, New Zealand, Canada introduced superannuation plan for all employees, including private-sector employees and workers, for protecting their financial benefits after retirement.
Most employers provide various retirement benefits to their employees to retain their trained employees for a longer period and making them resilient to economic shocks or recession due to pandemic or any other reasons. Superannuation benefit is one which is used as a retirement benefit offered to employees by their employers. This is different from pension or gratuity or provident-fund provision or any social-security plan of the government. Pension or gratuity is a compensation package of the government that needs government's treasury support. Provident fund needs contribution from the employees themselves, thus sometimes less attractive to them. But superannuation is a plan where industry contributes for their labour. Actually, industries do not contribute, they calculate total gross salary of the employees, then at least 10 per cent of the basic pay is deducted as superannuation charge and invested on behalf of the employees in an insurance company to grow their capital. In fact, many employees may not even know that they have been provided with superannuation as the contribution to the superannuation does not go from their pocket. The industry has been protecting their future under a framework where none is losing, rather everyone is winning. Intention of the industry is to protect their employees from any future unnatural financial shock such as economic recessions and/or pandemic.
Australia introduced superannuation as a fund that people pay while they are working, so that they receive future payment when they stop working or become old. Superannuation funds refer to the retirement benefit offered in the form of monthly old-age payments. Superannuation is compulsory for all people who work in Australia. Australian Federal law dictates minimum amounts that employers must contribute to the superannuation fund for their employees, on top of standard wages or salaries. Employer shall pay contributions in accordance with the superannuation act on behalf of each eligible employee to an approved Superannuation Fund or Scheme. It is an organisational pension programme created by a company for the benefit of its employees. In other words, it is referred to as a company pension plan.
Today, most companies of developed and developing countries offer superannuation scheme to support their workers in the private sector. Usually, companies take superannuation plans from any of the approved insurance companies who arrange a strong pension plan for their employees. At the time of retirement or resignation, employees have the option of buying a superannuation-linked pension from any other insurance company. If an employee resigns from a company and moves to another company, he can transfer his superannuation funds to the new company. Interest from a superannuation fund is tax-free as superannuation plan is a monetary compensation plan to benefit employees. An employee can make use of the funds at times of incapability to continue work or any disaster period.
While the burden of pension and other social-safety-net programmes create huge load on government's budgetary obligations, superannuation has asserted itself as a viable policy alternative to help retired workers in the private sector.
Superannuation plan benefits private employees, workers by encouraging them to save for their retirement through superannuation contributions. At the same time, superannuation plays a stabilising role in the economy that reduces reliance on the government's pension scheme which spends from the national budget. Once we had seen a move in 2015 to introduce a universal pension scheme for retiring people, including private-sector employees. But it did not get momentum, maybe, due to huge pressure on public exchequer. Without involving any contribution from public exchequer, superannuation is the best option to introduce old-age payments for the retired employees or workers of the private sector. The informal private-sector employees such as transport workers, factory workers, shop or mall workers, industry workers, restaurant workers, garment, leather, pharmaceuticals, jute, ship-breaking, cold storage, plastic, chemical, fertiliser, construction workers, cleaners, security personnel, rickshaw-van pullers etc employ 86.2 per cent of the workforce in Bangladesh. But the provision for any old-age-payment plan or scheme like pension of government employees after retirement is absent for them. In order to achieve the targets enshrined in SDG goal 8 by 2030 and to implement the workforce poverty issues under the Eight Five-Year Plan, superannuation plan for private-sector workers should get due priority.
The Bangladesh Labour Welfare Foundation Act 2006 under the Ministry of Labour and Employment or a separate Act in this regard may find options for the superannuation plan by taking example of the best practices of the world for the protection of old-age financial benefits of the millions of workers in the private and the informal sectors of the economy.
Dr Md Shamsul Arefin is a former senior secretary, Government of Bangladesh.