THE subscription rate for the highly-publicised universal pension scheme in Bangladesh saw a sharp decline of approximately 87 per cent in the second month, ending on September 17.
Only 1,669 individuals enrolled in the programme by paying the required subscription fees during that period.
This figure stands in stark contrast to the initial month, where 12,876 subscribers signed up following the scheme’s inauguration by Prime Minister Sheikh Hasina on August 17.
Several factors contribute to this decline in subscriptions. Firstly, political uncertainty in anticipation of the upcoming national election and the ongoing economic crisis have deterred people from participating in the programme.
The government faces pressure, both domestically and internationally, to conduct the next general election in a free, fair, and participatory manner.
Additionally, the country’s economic activities have been severely affected by a shortage of dollars and nearly double-digit inflation over the past year.
The scheme initially comprised four offerings: Probash, Pragati, Surokkha, and Samata, with monthly subscription fees ranging from Tk 1,000 to Tk 10,000.
The government subsidises half of the monthly subscription fee for Surokkha, which is designed for low-income groups, while the other three schemes are fully contributed by the subscribers.
However, it’s important to note that the pension authority has not yet disclosed its fund management plans, a crucial component of pension schemes worldwide.
Traditionally, pension funds are invested in low-risk instruments to generate profits, which are then used to pay subscribers upon the scheme’s maturity.
Unfortunately, the government’s options are limited because the country’s stock market has not recovered from its collapse in 2011, rendering it unreliable for general investors.
The bond market primarily serves banks, with returns not exceeding 8 per cent, and high inflation has reduced the appeal of investing in commercial banks to nearly a zero-sum game.
Over the years, people’s trust in the government’s financial management has significantly eroded due to policies that support loan defaulters, instances of fund embezzlement, unchecked corruption, and a lack of adherence to the rule of law.