In a landmark decision set to reshape retirement benefits for state employees, the government has mandated the inclusion of all personnel joining autonomous, self-regulated, state-run, statutory organizations, or their subsidiaries into the Universal Pension Scheme (UPS) effective July 1st.

Under the newly introduced scheme dubbed "Prottoy," freshly recruited employees will be automatically enrolled in the Universal Pension Scheme, as outlined in a recent notification from the Finance Division's regulations wing.

Moreover, current employees within these entities can opt to join the UPS, provided they have completed a minimum of 10 years of service, as per the notification.

For the first time in Bangladesh's history, the government is imposing mandatory participation in the public pension system across institutions.

According to the scheme, organizations will deduct a maximum of 10% of an employee's basic salary or a cap of Tk5,000, whichever is lower, with the corresponding amount being deposited into the employee's pension account. Individuals also have the option to increase their subscription rate and make additional contributions.

Employees who contribute continuously for at least 10 years will receive a monthly pension, while those with fewer years of subscription will receive a one-time refund along with accrued profits.

For instance, an employee contributing Tk 10,000 per month for 42 years can expect a monthly pension of Tk3,44,655, while a 10-year contribution would result in a monthly pension of Tk15,302.

This decision significantly expands the scope of the public pension system, encompassing various entities such as public universities, cadet colleges, corporations, government banks, and research institutes, among others.

Bangladesh, with nearly 400 state-run entities and over 400,000 employees, has traditionally relied on the Contributory Provident Fund (CPF) for retirement benefits. However, this shift marks a substantial departure from the CPF model.

Fahmida Khatun, Executive Director of the Center for Policy Dialogue, lauded the move as a step in the right direction. However, she emphasized the importance of extending similar benefits to government job appointees to address disparities in benefits across sectors.

Prime Minister Sheikh Hasina officially inaugurated the Universal Pension Scheme last year, introducing four distinct products – Pragati, Surokkha, Samata, and Probashi – aimed at ensuring financial security for citizens aged between 18 and 50, including expatriate Bangladeshis.

As of March 2nd this year, over 21,095 individuals have registered for the scheme, with a cumulative deposit exceeding Tk32.63 crore, marking a promising start towards the government's goal of enrolling 10 crore people in the pension system by 2023.