The government is planning a major overhaul of universal pension scheme, with proposals to introduce lifetime pensions for surviving spouses, health insurance, emergency loans and an option to withdraw from the scheme under certain conditions.

The proposed reforms are aimed at making the pension system more attractive and acceptable to the public, officials said.

A meeting of the National Pension Authority’s board of directors, chaired by Finance Minister Amir Khosru Mahmud Chowdhury, is scheduled for Thursday.

The proposals are expected to be discussed and may be finalised at the meeting where The finance minister serves as the board chairman.

National Pension Authority Executive Chairman Md Suratuzzaman said several reform proposals would be placed before the board to increase public participation.

“If the proposals are approved and the necessary amendments are made to the regulations, the new facilities could be introduced within the next one to two months.''

The government launched the universal pension scheme in August 2023 to bring the elderly under sustainable social security and address the expected rise in the dependency ratio as the working-age population declines.

However, nearly three years after its launch, participation has remained below expectations.

Officials and stakeholders attribute the limited response partly to lower returns compared with bank deposit interest rates and the lack of immediate benefits for subscribers.

So far, 379,920 people have registered under the scheme’s four programmes, with total deposits of Tk 2.8852 billion.

The Samata scheme, designed for people below the poverty line, accounts for the largest share, with 287,224 subscribers and deposits of Tk 568.5 million.

The expatriate-focused Probash scheme has attracted the fewest participants, with just 1,171 subscribers, including 97 women. Deposits under the scheme stand at Tk 118.7 million.

Under the existing rules, subscribers begin receiving monthly pensions at the age of 60. If a pensioner dies after starting to receive the pension, the nominee receives the same monthly amount until the pensioner would have reached the age of 75.

Under the proposed reform, the pensioner’s husband or wife would receive the pension for life instead of the nominee.

The proposal has been modelled on the existing pension system for government employees.

The board may also consider a proposal to reduce the pension eligibility age from 60 to 55.

Although the Universal Pension Act allows subscribers to borrow against part of their accumulated contributions for specific needs, the facility has not yet been introduced.

The authority now plans to activate the loan facility. Under the proposal, subscribers would be able to borrow a portion of their accumulated funds for specified purposes. The interest earned on the loan is also proposed to be credited to the subscriber’s pension account.

Another proposal would allow subscribers who have contributed for at least five years to exit the scheme and withdraw their entire accumulated amount if they become physically and financially incapacitated, subject to specific conditions.

Officials believe the provision could reduce concerns over financial uncertainty associated with committing to a long-term pension scheme.

Health insurance for Tk 10-20 a month. The government is also working on a plan to bring pension subscribers under health insurance coverage.

A draft proposal has been prepared and sent to the Financial Institutions Division of the Finance Ministry.

Under the proposed plan, subscribers would pay a monthly premium of Tk 10 to Tk 20, with the aim of providing health coverage to pensioners.

The government is also considering introducing a Shariah-compliant pension scheme to make the universal pension system more acceptable to people seeking an Islamic finance-based option.

If the board approves the proposals, the authorities will move to amend the relevant regulations and implement the reforms.

The National Pension Authority expects the new benefits to help increase participation in the universal pension scheme.

Sun News/ra