A news report published in a national daily on Friday said that longer life expectancy, coupled with the gradual disappearance of the joint family concept, makes it an imperative for Bangladesh to design a robust universal pension system to avoid impoverishment at old age and accompanying social distress. The average life expectancy of a person is now around 72 years, which will result in an increased dependency ratio and declining potential support ratio, says a study report.
The report presented at a webinar on Thursday by World Bank Lead Governance Specialist- Financial Management Suraiya Zannath Khan, said a fully funded pension system should be introduced for a universal pension system, formally or informally. Since the government pensioners are only a small fraction of the total population, a wider coverage should be envisaged by the government. During this pandemic the inequality between rich and poor has increased creating an enormous gap as many middle-income group people turned poor losing their jobs. Since inequality is now a cause of serious concern, a Universal Pension System could serve as a tool to reduce inequality as well as protect the interest of senior citizens in income distribution.
Pension, a form of provision of annuities for aged people, was first implemented in France in the 19th century. The system was introduced in the UK in 1834 and in Germany in 1873. Pension schemes for elderly people in this region were first adopted in 1924, but it was only for the government servants. At present, there is no formal pension system in Bangladesh on a national scale, except for only the employees in government service (civil and military). The number of government servants is around 1.4 million, which accounts for only 5 per cent of the total employed population. The employees in the private sector are almost nil under pension coverage. Additionally, workers from the agricultural sector constitute about 50 per cent of the total employment and contribute about 40 per cent share of the total GDP. Despite the size, this sector also does not have a pension system.
Bangladesh needs a national pension system that cuts across sectors. It needs to start early to create access for everyone, ensure social security and continue reaping the economic benefits it gains over decades to create a sustainable economy based on inclusive growth and development for all.
