Why financial literacy matters today

Planning for life after retirement is no longer a luxury-it's a necessity. As Bangladesh experiences longer life expectancy and a growing middle class, the question of whether today's savings will be enough for tomorrow.

Retirement planning is not just about setting money aside; it's about understanding how to save, when to save, and how much to save based on future needs. Without basic financial knowledge, even the most well-designed pension scheme may fall short of its goal.

Banks are offering long-term deposit plans and pension-oriented savings schemes, while insurance companies are offering annuities and pension-linked life policies to provide an added safety net. Besides, the government's National Pension Scheme is a groundbreaking step, offering millions of workers-both formal and informal-a chance to secure their future. Despite these promising opportunities, too many people remain unaware of how to make the most of them. This is where financial literacy becomes critical: empowering every citizen to confidently plan, save, and retire with dignity.

Bangladesh has taken a historic step toward building a more secure future for its citizens with the launch of the National Pension Scheme in 2023. For the first time, workers from both formal and informal sectors have access to a structured retirement savings plan backed by the state. However, the success of this ambitious initiative largely depends on one critical factor: financial literacy.

Financial literacy enables individuals to understand how retirement savings work and why early enrollment is beneficial. It explains key concepts like compound interest, inflation, risk diversification and long-term budgeting-all essential for making informed choices about pension contributions.

The government's introduction of the Universal Pension Scheme (UPS) marks a significant policy shift. With four different modules- Progoti, Surokkha, Samata and Prabashi*-the schemes are designed to cater to a wide range of citizens, including private-sector employees, informal workers, low-income groups, and expatriates.

Citizens can now voluntarily contribute to a pension account during their working years and receive a monthly pension after the age of 60. The system is digital, flexible, and inclusive. Though early data suggests that awareness and participation remain low, especially outside urban areas.

For example, a 30-year-old worker who begins contributing BDT 1,000 per month to the national pension scheme may receive a modest monthly income after 60. But without understanding the value of long-term saving and the power of compounding, many are reluctant to commit even this small amount. Others may be unaware of the flexibility to pause or adjust contributions during financial hardship.

Bangladesh's workforce is still dominated by informal employment-ranging from street vendors and transport workers to farmers and home-based artisans. For decades, these groups had no access to formal retirement plans. The National Pension Scheme offers them a long-overdue safety net.

However, a significant barrier remains: low levels of financial awareness. Many informal workers lack access to information about the scheme, let alone the financial skills to assess how it fits into their broader personal budgeting. Without targeted financial literacy campaigns, the very groups who need the scheme most may remain outside its reach.

Building a retirement-ready society starts with education and awareness. As the significance is enormous, financial literacy has been integrated into school curriculum. Students are able to learn early about saving, goal-setting, and the basics of savings, pensions and insurance.

Employers, especially in the private sector, should take responsibility too. Financial literacy sessions and retirement planning workshops can encourage employees to participate in the pension scheme and make more informed financial choices.

Banks have been playing vital rule for sound retirement of people. They have already introduced different long-term deposit products, pension-oriented DPS schemes, and bonus savings plans that encourage disciplined saving habits. With time banks revise existing products in consideration of retirement life. Several banks offer insurance benefits with their DPS (Deposit Pension Scheme) products. These schemes often include life insurance, accidental death coverage or disability benefits, providing an extra layer of security for depositors. Institutions like Midland Bank, BRAC Bank, Eastern Bank, Prime Bank, Dutch Bangla Bank and also many other banks conduct financial literacy campaigns to raise awareness among youth and working individuals.

Insurance companies are providing tailored retirement plans, annuities and pension-linked life policies. These products not only offer returns but also ensure protection against unforeseen health or life risks.

Mass media also plays a powerful role. Public service announcements, TV talk shows, online campaigns, and community outreach can simplify and promote retirement planning to a wide audience. The message must be clear: you don't need to be rich to plan for retirement-you just need to be consistent and informed.

Bangladesh's digital banking infrastructure provides an opportunity to expand the reach of financial literacy. Mobile financial services (MFS) can serve as platforms to promote retirement savings behavior. Digital calculators, chatbots, and pension tracking tools can empower users to manage their savings confidently.

Moreover, fintech startups and microfinance institutions can collaborate with the government to deliver simplified pension onboarding and advisory services at the grassroots level.

The National Pension Scheme is a bold and promising initiative that addresses a long-standing gap in Bangladesh's social security framework. But to ensure it becomes a truly national success, the government must now invest just as seriously in financial literacy as it has in the pension infrastructure. The respective authority just needs to gain the "trust" of our people.

Every citizen, whether a garment worker in Narayanganj or a small business owner in Rajshahi, should be equipped with the knowledge and confidence to plan for their retirement. With greater awareness, better tools, and widespread education, we can build a generation that retires not in regret, but in dignity and peace.

Md. Rashed Akter is Head of Retail Distribution Division, Financial Literacy Wing and Chief Bancassurance Officer (CBO), Midland Bank PLC. md.rashedakter@midlandbankbd.net