Bangladesh: New state pension program approved

Employer Action Code: Monitor

Parliament has approved the Universal Pension Management Act 2023, which creates a lifetime retirement pension benefit for Bangladesh citizens working in the private sector who choose to participate and meet the eligibility conditions. Previously, only public-sector workers had access to a state pension arrangement.

Key details

• Participation will be voluntary and open to Bangladesh citizens ages 18 to 50 who work in the private sector (in or outside the country), though the government may make participation compulsory in the future. Those over age 50 may participate under certain conditions.
• Participants will contribute to their individual accounts monthly or quarterly, based on contribution rates still to be determined by the government. Funds will be managed centrally, with investment returns allocated to the individual accounts.
• A lifetime tax-free monthly pension benefit based on the account value will be payable from age 60 for members having at least 10 years of contributions. Those who join after age 50 would still be subject to the 10-year contribution requirement.
• The program will be overseen by a five-member national pension authority and a 15-member governing body including government, business and labor representatives. The exact plan launch date is yet to be determined but is expected to be sometime in 2023.  

Employer implications

Though employers have no direct role in funding or administering the new program, they should be aware of its existence as a future source of retirement income for their employees. Almost all of the employers surveyed by WTW offer provident funds, as companies are required to offer a fund if at least three-quarters of their workforce request it in writing. All companies in designated Export Processing Zones must have provident funds for their employees.