Without a fund management plan, why is govt introducing universal pension schemes?

Since the time when late AMA Muhith was Finance Minister, the government was talking about a pension scheme for all people in Bangladesh and four schemes under this programme will kick start today.

These four schemes, Probash, Pragati, Surokkha and Samata will be available now for monthly subscription fees of Tk 1,000-10,000 for citizens aged between 10 and 42 years.

Three of these schemes, Pragati, Samata and Prabashi are basically contributory schemes meaning that here there will be no government subscription fees.

But as far as Surokkha is concerned the government will make a monthly subscription as the target people of this scheme are low-income groups.

Thus, only it has the quality of a pension scheme.

Of the other three, Pragati has been designed for formal private sector workers and employees.

But employees will have to bear the full subscription fee if their employers fail to provide half of the monthly contribution.

Critics say that the government has taken this plan of universal pension scheme to raise money from all people to run the government as it does in the case of Jatiyo Sanchoypatra or the National Savings Certificate, experts have rightly pointed out that the government has kept people in dark regarding the fund management plans of the four schemes that are being introduced.

Though from the government it is said that the fund management plans are underway, experts rightly pointed that this hurry reflected the weakness of the overall programme as fund management is a vital component of such pension schemes worldwide.

Since security of the subscriptions contributed by people is crucial, the schemes may not generate much interest from people in general if it lacks clarity and credibility regarding fund management.

There are two major options, according to economists, to invest the raised money from people: in stocks and in the bond market.

However, the stock market in Bangladesh is not a very encouraging place because it has failed to earn trust of investors in general because the market is continuously manipulated.

In the past, it suffered total collapse two times, both during the time of this government.

On the other hand, return from the bond market, limited only within banks, is not lucrative, only eight per cent.

Investment in commercial banks is also not bright as high inflation will make it a zero-sum game.