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Pension System

Pension System

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Published by Mohona Abedeen

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Published by: Mohona Abedeen on Nov 11, 2012
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07/16/2014

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 Pension System In Bangladesh
Abstract
 
The retirement issue mostly relates to those who are in job situation and theretirement age in public service is 57 years. The agriculture sector has no retirementconcept as also the case in self-employment. The aspects of retirement in terms of age, old age welfare and social impact have been discussed in this paper.Pension system in Bangladesh is mainly observed in government services. Thepension issues are settled according to the rules of the Public Servants (Retirement)Act of 1974. There are four categories of pensions which have been elaborated andanalyzed in the paper.There are about 36 million labors working in agriculture sector in the country, who arenot covered by pensions. Similarly migrant workers do not receive any pension. Thereis no provision of pension for private sector workers. They only receive some gratuityat retirement.Government has recently introduced Old Age Allowance Programme which coverssmall fraction of elderly people in the country who are not covered by pension system.Although limited in coverage, this is a healthy beginning of providing security to vastmajority of the elderly people who are not covered by the existing pension system.Family support is the basic security of most elderly people in Bangladesh. Policy levelinitiatives and institutional arrangements to provide social security to the elderlyoutside the family system is quite limited. There is a felt need for evolving a retirementand pension system that will be fair, equitable to all segments of the society, meet theconstitutional obligation of social security for the elderly and conform to basic humandignity.
 
Introduction
Bangladesh, the eighth largest and one of the most densely populated countries. It has apopulation of 158,570,535 millions in 2011. In 2007, the number of the older people aged 60and above in this country was 9.41 million and it has increased from 1.94 million in 1951 whichis quite phenomenal. The economy of Bangladesh is mostly agro-based. Agriculture makeshighest contribution to Gross Domestic Product (GDP) as can be deduced from the statistics oncontributions of different sectors. Bangladesh witnessed on an average growth rate of littleover 5% of GDP between 1996-2000 and the projection for the present fiscal year is around 6%.Bangladesh is now the 8
th
populated country in the world and projected to remain in the sameposition in 2050.Bangladesh Government has introduced a pension system for its retired employees since theBritish rule in 1924.Retirement age in government services is now 57 years. According togeneral recruitment rul
es, a person can enter into public service from minimum eighteen years’
age provided that the person has requisite qualification for service. Public pension is one of thekey areas of public expenditure in Bangladesh. Pension rules were modified after the end of theBritish rule in 1952 and later it was modified again in different stages in 1972, 1974, 1977, 1982,1985, 1988, 1989, 1991 and 1994 after the independence of Bangladesh in 1971.At present,generally, a government employee gets 32, 48, 64 and 80 percent of the basic salary as thepension after retiring or at death at the 10th, 15th, 20th and 25th year of his/her employmentrespectively. There are different types of pension such as Compensation Pension, InvalidPension, Superannuation Pension, Retiring Pension, Optional Pension, and Family Pension.Pension delivery processing for compensation, superannuation and retiring pensions are almostsimilar. But this is different for invalid, family and extraordinary pensions. For example, 10-11sets of papers have to be submitted to the authorities for retiring pension. But for invalidpension, 11-12 sets of papers have to be submitted. In case of family pension, 10-18 sets of papers have to be submitted.
 
It has various types of pension:
Compensation pension
This type of pension is provided to workers or officials who have consequently lost their post asa result of elimination of their posts in downsizing some offices or organization by thegovernment to maintain an economic balance.
Invalid pension
If a person becomes invalid permanently, physically or mentally, in that case the governmentgrants the person invalid pension. There are a number of stipulations that has to be satisfiedand long procedures that has to be done to earn or achieve this type of pension from thegovernment.This includes medical and travelling issues where the person has to provide correct and validpapers and documents for their claims as per the requirement of the governing. But in case theperson becomes invalid due to unacceptable situations by the organization, that person will notbe entitled to invalid pension.
Superannuation pension
Superannuation pension occurs when a public servant compulsorily has to retire at certain agewhich is determined by the government. This extent of time is perhaps determined by thegovernment and also the profession of the individual is also taken into consideration. Recentlythe government of Bangladesh has increased the retirement of judges and public universityteachers to 65 years; whereas the retirement ages for military personnel remain at the age of 57.
Retiring pension
According to the government’s law, if it is necessary to do so, a public servant has to retire after
completing 25 years of service without assigning any reason; a structure of pension has to bepaid to the individual. This type of pension is known as retiring pension.

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