Dr. Md. Shamsul Arefin :
The Sustainable Development Goal 8 is committed to “decent work and economic growth” that truly desires fair wages and social protections for the working-class people by 2030. The Eighth Five-Year Plan (July 2020-June 2025) of Bangladesh enshrined the extension of existing intensive social security plan for the people at large while eliminating poverty and narrowing inequality. The superannuation plan can be a good option for materializing the commitment enshrined in the Sustainable Development Goal 8 and Eighth Five Year Plan (July 2020-June 2025).
We have most of the financial security plans for the government workers and employees such as pension and gratuity. But the private sectors, NGOs, and informal sectors have been facing huge challenge to provide financial security for their workers. Thus, the private sectors remain vulnerable during pandemic or any kind of economic shocks or recession. Countries like Australia, New Zealand, Canada introduced superannuation plan for all employees including private sectors’ employees and workers for protecting their financial benefits after retirement.
Superannuation benefit is one which is used as retirement benefit offered to employees by their employers. This is different from pension or gratuity or provident fund provision or any social security plan of the government. Pension or gratuity is a compensation package of the government that needs government’s treasury support. Provident fund needs contribution from the employees themselves thus sometimes less attractive to them. But superannuation is a plan where industry contributes for their labor. Actually, industry does not contribute, they calculate total gross salary, then on top of their salary, head of accounts compulsorily cut at least 10% of their basic pay as superannuation charge and invest it on behalf of the employee in the insurance company to grow their capital. The industry expressed or fixed monthly salary to their employees after deducting 10% of their pay as superannuation contribution. In fact, many employees may not even know that they have been provided with superannuation as the contribution to the superannuation does not go out of their pocket. The industry has been protecting their future under a framework where none is losing rather everyone is winning. Intention of the industry is to protect their employees from any future unnatural financial shock such as economic recessions and or pandemic.
Today, most companies of developed and developing countries offer a superannuation scheme to support their workers in the private sectors. Because the public sector government entities are providing pensions to their employees for making their situation stronger. But private sectors feel why should they make their own situation vulnerable? Usually, the companies take superannuation plans from any of the approved insurance companies who arranged a strong pension plan for their employees. At the time of retirement or resignation, employees have the option of buying a superannuation-linked pension from any other insurance company. If an employee resigns from a company and moves to another company, he can transfer his superannuation fund to the new company. Interest from a superannuation fund is tax-free as because superannuation plan is a monetary compensation plan to benefit employees. An employee can make use of the funds at times of incapability to continue work or any disaster period.
While the burden of pension and other social safety-net programs create huge load on government’s budgetary obligations, superannuation has asserted itself as a viable policy alternative to help retired old workers in the private sector.
Superannuation plan benefits private employees, workers by encouraging them to save for their retirements through superannuation contributions. At the same time, superannuation plays a stabilizing role in economy that reduces reliance on the government’s pension scheme which is spent from the national budget. Once we have seen a move in 2015 to introduce a universal pension scheme for retiring people including private sector employees. But it does not get momentum due to, may be, huge involvement of the public exchequer.
Without involving any contribution from public exchequer, superannuation is the best option to introduce old age payment for the retired employees or workers of the private sector. The informal private sectors’ employees such as transport workers, factory workers, shop or mall workers, industry workers, restaurant workers, garment, leather, pharmaceuticals, jute, ship-breaking, cold storage, plastic, chemical, fertilizer, construction workers, cleaners, security personnel, rickshaw-van pullers etc employ 86.2 per cent of the workforce in Bangladesh. But the provision for any old age payment plan or scheme like pension of government employees after retirement is absent for them. In order to achieve the targets enshrined in SDG goal 8 by 2030 and to implement the workforce poverty issues under Eight Five-Year Plan, authority may exercise the potentiality of introducing a superannuation plan for the private sectors’ workers.
The Bangladesh Labor Welfare Foundation Act 2006 under the Ministry of Labour and Employment or a separate act in this regard may find options for the superannuation plan by taking example of the best practices of the world for the protection of old age financial benefits of the millions of workers in the private and the informal sectors of the economy.
(Dr. Arefin is former Senior Secretary).
