New Age | New pension fund rules issued after a year

The government set out seven areas for pension fund investments in regulations published on Sunday, almost a year after the introduction of the scheme that has already sparked protests.

Investment areas include government treasury bonds, government treasury bills, government securities, banks with scheduled AA rating, mutual funds and category ‘A’ bonds approved by the Bangladesh Securities Exchange Commission.

Pension fund funds can also be invested in infrastructure projects implemented by the government or in securing such projects in accordance with the new regulations.

The regulations, published in the official gazette by the finance department, stipulated that investment exposure in a single instrument could not exceed 25 per cent, except for government securities.

The regulations also prohibit pension funds from investing in entities run by private individuals and entities outside the country.

To manage the funds, an eight-member fund management committee has been authorized to open multiple accounts in government banks. The committee can also open accounts in private banks with AA ratings from credible rating agencies.

The four instruments – Probash, Pragati, Surokkha and Samata – were introduced with the new pension system, which will come into effect in August 2023 and is expected to replace the current one.

Recently, a new instrument called Prattay was introduced to cover newly employed persons in autonomous and semi-autonomous public bodies, which led to the absenteeism of academic teachers.

During the launch of the programme, former Finance Minister AHM Mustafa Kamal expressed hope that it would attract many subscribers and help the government cope with the credit crisis.

However, the pension body has found it difficult to attract customers, with sources close to it saying that by June, the total membership was around 3,32,773.

The government received about Taka 970 million in contributions, of which Taka 930 million was invested in treasury bonds.

The government plans to conduct a feasibility study on the Asian Development Bank’s pension system as part of a project financed by the bank.

The proposed three-and-a-half-year, $325 million project aims to strengthen the transition of pension institutions to a contributory pension system.