The Ministry of Finance on Tuesday clarified several aspects of the Pratyay scheme amid teachers’ protest against inclusion of universities in the scheme.
The ministry said the universal pension scheme Pratyay that came into force on 1 July aims to provide a sustainable pension system for all segments of society, including employees of autonomous, semi-autonomous, and state-owned organisations.
"Currently, there are 403 such organisations, with around 90 already having a pension system. The remaining organisations are covered under the Contributory Provident Fund (CPF) system. Employees under the CPF receive a lump sum gratuity but no pension. To address the lack of a structured pension system for the vast majority of the population, the government has introduced the universal pension scheme to create a comprehensive pension framework for people from all professions," the ministry said.
Key Points of the Pratyay Scheme Clarified:
Existing Pension Benefits: Teachers and employees who were in service as of June 30 of the previous fiscal year will continue to receive their previous pension benefits.
Transition to Defined Contributory System: The existing unfunded defined benefit system, where pension expenses are met from allocated budgets, will transition to a funded defined contributory system starting 1 July. Employees' salaries will be subject to a fixed monthly contribution, with 10% of the basic salary or a maximum of BDT 5,000 (whichever is less) being deducted and matched by the employer. This amount will be deposited into the employee's corpus account.
Sustainability: The unfunded defined benefit system places a growing financial burden on the government, which is unsustainable in the long run. The funded contributory pension system will build a fund based on contributions and investment profits, ensuring sustainability. Similar systems have been in place in neighboring India since 2004.
Social Security for All: The new pension management will gradually bring all professions under a sustainable social security framework, ensuring financial inclusion and inclusive development.
University Teachers' Service and Pay Protection: Public university teachers who are reappointed to the same or higher positions will retain their existing pension benefits, as it will not be considered a new appointment. Only those newly appointed from July 1, 2024, will be included in the Pratyay Scheme.
Retirement Age: Although the universal pension system mentions pension eligibility from age 60, university teachers retire at 65 and will receive a lifetime pension from that age. The government will amend the law as needed.
Leave Benefits: Accumulated leave benefits, such as lump-sum grants and PRL leave, will remain unchanged.
Pension Amount: The focus is on a reasonable monthly pension rather than a lump sum gratuity. For example, an employee contributing Tk5,000 monthly with employer matching will receive Tk124,660 per month after 30 years, with total contributions of Tk1.8 million, potentially receiving Tk22.4 million over 15 years.
Pension Continuity: In the new system, pensioners will receive a lifetime pension. In case of the pensioner's death, the spouse or nominee will receive the pension for the remaining period up to 15 years from the pension start date. For example, if a pensioner dies after receiving 5 years of pension, the spouse or nominee will receive the pension for an additional 10 years.
The Ministry of Finance emphasised that the new scheme aims to create a sustainable pension system that includes all classes and professions, ensuring long-term financial security and social inclusion.