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An Estimation of the Implementation Costs and Financing Options for Introducing a Universal Pension Scheme in Bangladesh

Author

Listed:
  • Mustafizur Rahman
  • Towfiqul Islam Khan
  • Mostafa Amir Sabbih

Abstract

The number of people aged more than 60 in Bangladesh is projected to constitute 20% of total population by 2051. The demographic momentum makes it necessary to pursue policies that guarantee a secured life for the country’s senior citizens. Currently, more than 40% of old age population (more than 65 years) in Bangladesh do not receive any type of pension or social security benefits. In this backdrop, introduction of a universal pension scheme (UPS) is an idea that should merit serious consideration. The idea of a UPS is also aligned with several Sustainable Development Goals (SDG) targets. Based on the International Labour Organization multi-pillar pension model, the article deals with required financing under different scenarios of introducing UPS in Bangladesh. The study estimates that for introducing a non-contributory UPS in Bangladesh, it would require an additional average allocation equivalent to 0.1%–0.5% of gross domestic product per annum between now and 2040. The article also estimates financing needs considering two options for the contributory UPS. The article concludes that UPS in Bangladesh can be launched on a limited scale which then could be expanded in scope and coverage in a gradual and phased manner. The article also underscores that introduction of UPS will create opportunities to rationalize the existing safety net programmes that will release funds for underwriting the UPS. JEL: H53, H55, I31, I38

Suggested Citation

  • Mustafizur Rahman & Towfiqul Islam Khan & Mostafa Amir Sabbih, 2021. "An Estimation of the Implementation Costs and Financing Options for Introducing a Universal Pension Scheme in Bangladesh," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 22(1), pages 110-131, March.
    • Handle: RePEc:sae:soueco:v:22:y:2021:i:1:p:110-131
    DOI: 10.1177/13915614211008102
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    References listed on IDEAS

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    1. Holzmann, Robert & Paul, Richard Hinz & Dorfman, Mark, 2008. "Pension systems and reform conceptual framework," Social Protection Discussion Papers and Notes 46175, The World Bank.
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    Cited by:

    1. María del Carmen Valls Martínez & José Manuel Santos-Jaén & Fahim-ul Amin & Pedro Antonio Martín-Cervantes, 2021. "Pensions, Ageing and Social Security Research: Literature Review and Global Trends," Mathematics, MDPI, vol. 9(24), pages 1-25, December.

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    More about this item

    Keywords

    Pension schemes; universality; financing; senior citizens; SDGs; Bangladesh;
    All these keywords.

    JEL classification:

    • H53 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Welfare Programs
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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