Bangladesh Brings State-Owned Firm Employees Under Universal Pension Scheme

🏛 The National Pension Authority has decided to bring employees of state-owned companies who are not covered by the government's existing pension system under the "Pragati" scheme of the Universal Pension Scheme. The decision — taken at the fourth meeting of the National Pension Authority Board of Directors — represents a meaningful expansion of Bangladesh's pension coverage to a category of workers who have historically fallen through the gaps of the country's fragmented retirement benefit system.

📊 The authority also approved proposals to introduce an Islamic pension scheme, extend the age limit for nominees to receive pension benefits after a pensioner's death, and set returns of up to 11.72% for the 2025-26 fiscal year. The decisions were taken at the board meeting chaired by Finance Minister Amir Khosru Mahmud Chowdhury at the Secretariat. Briefing reporters after the meeting, National Pension Authority Executive Chairman Md Suratuzzaman said that retirement benefits of employees of state-owned companies outside the government's direct pension system depend on their companies' service rules and internal arrangements.

📜 Pragati Scheme Expansion: Who Benefits?

Employees of state-owned companies do not receive state pensions like government civil servants. Their retirement benefits depend on their companies' service rules and internal arrangements — which vary widely across the approximately 100+ state-owned enterprises in Bangladesh. This is why the initiative to bring them under the Pragati scheme has been taken, Suratuzzaman said. This decision will allow employees of such companies and entities that are not directly covered by the government pension system to join the Universal Pension Scheme. The full list of eligible companies, and the implementation process will be determined later, according to sources.

• 🏛 Scheme: Pragati (Universal Pension Scheme)
• 👥 Beneficiaries: SOE employees without government pensions
• 💰 Return rate FY2025-26: 11.72% (up from 11.68%)
• 💰 Previous return FY2024-25: 11.61%
• 🌏 Islamic pension: Approved (regulations to be formulated)
• 👥 Nominee age limit: Extended (specific age TBD after actuarial review)
• 📅 Pension start age: Under review (considering 55, vs Spain 67, UK 66)
• 🤝 Partners: ADB and local consulting firms

💰 Return Rate: 11.72% For FY2025-26

The board approved a proposal to set the maximum return on the Universal Pension Fund at 11.72% for the 2025-26 fiscal year. The rate was previously 11.68%. The fund provided a maximum return of 11.61% in FY2024-25. Suratuzzaman said the authority determined the new return rate after considering the pension fund's investments, income, and expenditure. The progressive increase in return rates — from 11.61% to 11.68% to 11.72% over three fiscal years — reflects the maturing of the pension fund's investment portfolio as it scales up and achieves more stable returns.

🌏 Islamic Pension System Approved

The board also approved the proposal to introduce an Islamic pension system under the Universal Pension Scheme. The authority will formulate separate regulations for this new system, Suratuzzaman said. The Asian Development Bank and local consulting firms are working on the initiative, he said. The Islamic pension system would invest subscriber contributions in Shariah-compliant instruments — addressing the demand from Bangladesh's Muslim-majority population for retirement savings that align with Islamic financial principles. The ADB's involvement signals international development partner support for the Islamic pension initiative.

📜 Pension Start Age: Under Actuarial Review

The authority will finalise a proposal to allow beneficiaries to receive pension benefits from age 55 after consulting actuaries. Suratuzzaman said they are also considering retirement and pension systems in other countries, and cited examples of Spain and the United Kingdom where pension benefits begin at age 67 and 66, respectively. As life expectancy in Bangladesh is increasing, the authority will review the proposal based on financial and demographic considerations, he added. The reference to Spain (age 67) and the UK (age 66) — where pension ages are significantly higher than Bangladesh's proposed age 55 — reflects the actuarial tension between providing adequate retirement security and maintaining the long-term financial sustainability of the pension fund as life expectancy rises.

🌏 Strategic Context: Universal Pension Coverage Expansion

For Bangladesh's broader social protection strategy, the expansion of pension coverage to SOE employees represents a meaningful step toward universal pension coverage. Bangladesh's current pension system is fragmented: government civil servants receive defined-benefit pensions; private sector workers have no mandatory pension; SOE employees' benefits vary by company; and informal sector workers have historically had no retirement savings mechanism at all. The Universal Pension Scheme — launched in 2024 with four schemes (Probash, Progoti, Surakkha, Samata) — aims to create a unified pension framework that can eventually cover all categories of workers.

The inclusion of SOE employees under the Pragati scheme addresses a specific gap: workers who are employed by government-owned entities but do not receive civil service pensions. The coming months will reveal the scope of eligible SOEs, the subscription framework, and whether the expansion generates meaningful enrolment — or whether the implementation challenges that have constrained the broader Universal Pension Scheme's subscriber growth also limit the SOE expansion.