Employee retirement in Bangladesh typically depends on the specific sector you’re working in. Generally, government employees retire at the age of 59, and private sector employees at 60. Actually, retirement in Bangladesh isn’t just about age. It’s more likely about securing your future!
The country offers financially stable retirements with structured government benefits and Universal Pension Schemes. No matter your working sector, understanding your retirement options is essential to ensure a stress-free future!
What Is the Retirement Age in Bangladesh?
Retirement age is the officially recognized age at which employees end their service and become eligible for retirement benefits. The retirement age in Bangladesh differs between the government and the private sector.
| Sectors | Standard Retirement Age |
|---|---|
| Government Sector Employees | 59 years |
| Freedom Fighter Government Employees | 61 years |
| Army Officers | 58 years |
| Judges of Bangladesh | 67 years |
| Private Sector Employees | 60 years |
What Are the Retirement Policies and Laws in Bangladesh?
Typically, retirement in Bangladesh is regulated by different laws and policies depending on the sector. These policies and laws help to ensure proper compliance and planning.
Government Employees
Government employees’ retirement is typically governed by some policies. For instance,
- Public Servants (Retirement) Act, 1974,
- Government Service Act, 2018, and
- Pension Rules, 1966–2011.
As already mentioned, the government job retirement age in Bangladesh is 59 years. Yet, employees can go for voluntary retirement after completing 25 years of service. There are also proposals to reduce this to 15 years. However, these proposals have not been enacted yet. You will be required to do 25 years of service as a government employee to get voluntary retirement with pension benefits.
Armed Forces
In the Bangladesh Air Force, retirement ages vary by rank according to the Air Force Act Rules 2013. For instance, a Squadron Leader retires after 24 years of service while an Air Chief Marshals retire after 35 years of service. On the other hand, the standard retirement age for army officers is 58. The Army Act of 1952 outlines procedures for retirement, release, and discharge for the Bangladesh Army.
Private Sector
The Bangladesh Labour Act, 2006, generally governs the retirement of private sector employees. A worker employed in any establishment retires from employment upon attaining the age of 60 years, as mentioned in Section 28 of this act.
How to Calculate Retirement Benefits?
It is quite a straightforward process to calculate your retirement benefits, like pension or gratuity. It just requires knowing your last basic salary and how many years you have worked.
How Is Pension Calculated in Bangladesh?
The following formula is generally used to calculate how much pension government employees get in Bangladesh:
Pension = [(Last Basic Salary × Pension Rate) /2 ]× Gratuity Rate
Below is a quick example to help you understand.
Let’s assume your last basic salary is 30,000 BDT, you have done 25 years of service. So, your pension rate is 90% and gratuity rate is 230.
So, your Pension is:
= [(30,000 × 90%) / 2] × 230
= 3,105,000 BDT
Gratuity Calculation
Gratuity is a one-off payment an employee receives on retirement. The following basic gratuity calculation formula is used for both the government and private sectors.
Gratuity = Last Basic Salary × Years of Service
The principles of gratuity calculation:
- The employee gets 30 days’ salary for each completed year if service is less than 10 years.
- They get 45 days’ salary per completed year if service is 10 years or more.
- If an employee worked over 6 months in a year, it counts as a full year for gratuity.
Now, suppose your last drawn basic salary is 30,000 BDT. You have completed 11 years and 7 months of service. As you have worked for more than 10 years and over 6 months, you’ll get 45 days’ salary for 12 years.
So, the Gratuity is:
= (30,000 / 30) × 45 × 12
= 1,800 × 45 × 12
= 9,72,000 BDT
What Retirement Benefits Can You Expect in Bangladesh?
What benefits you get when you retire depend on your working sector. Generally, government retirees enjoy structured benefits under pension laws. In contrast, private sector workers now have access to the Universal Pension Scheme for financial security.
What Benefits Do Government Employees Get After Retirement?
Let’s have a quick overview below in this regard.
- Pension: This is the monthly payment you get after retirement. It is paid for life with possible family pension benefits.
- Gratuity: It is a one-off payment you receive after your retirement.
- Provident Fund: Many government employees contribute to the General Provident Fund. It offers a return upon retirement at the fixed rate of 7% to 8% of salary.
- Post-retirement Perks: A government employee may also receive benefits like transport facilities or office accommodation temporarily upon retirement. However, that depends on the department.
- Medical Allowance: All retired government employees above 65 years are now entitled to 2,500 BDT per month as a medical allowance. All retired government employees over the age of 65 now get a monthly medical benefit of 2,500 BDT.
How Does the Universal Pension Scheme Work?
There was no comprehensive pension system for private-sector employees. However, recently, the Universal Pension Management Act of 2023 introduced the Universal Pension Scheme for private-sector workers.
It is typically a voluntary pension scheme. Under this scheme, private workers contribute until the age of 60. Thereafter, they receive a lifetime pension. For this, employees have to choose a plan from the following four options.
- Probash For Expatriates
- Progoti For Private Sector Employees
- Surakkha For the Informal Sector
- Samata For Low-Income Citizens
How to Claim Retirement Benefits?
To get retirement benefits in Bangladesh, government employees need to fulfill the eligibility criteria. As for the employees in the private sector, retirement benefits are usually provided through the Universal Pension Scheme in Bangladesh or as per company policies. Here is how to claim retirement benefits.
Government Employees
The process typically includes the following steps.
1. First, you need to submit a formal retirement application to the respective departments.
2. You will also need these documents–
- Pension Application Form
- Service Book (Non-Gazetted)
- Last 3 Years’ Service Statement or LPC (Gazetted)
- Sanction letter of Retirement and PRL
- Expected Last Pay Certificate (ELPC) or Last Pay Certificate (LPC)
- Attested Photos and NID/Smart ID copies
3. The concerned department will verify the submitted documents. Then they will process the retirement benefits accordingly.
Private Sector Employees
Eligible citizens, generally aged 18 years and above, can apply to claim Universal Pension Scheme benefits. The 18 to 50-year-old eligible citizens have to pay subscriptions until 60 years of their age.
As for the above 50 years eligible citizens, they have to pay for 10 years to receive a pension until their death. Any Bangladeshi citizen, including those who are working or staying abroad, can also participate in this scheme.
How to Plan for Retirement?
You need to plan ahead to enjoy a secure and comfortable life after retirement. Follow these simple steps to build a plan in Bangladesh:
- First, set the target age of your retirement.
- Calculate your monthly expenses and all possible income sources.
- Now choose a savings or pension scheme accordingly.
- You should review and adjust your plan every year.
How Much Do I Need to Retire Comfortably?
Actually, it depends on your circumstances and desired lifestyle. It requires careful planning and saving. However, it is better to aim for a retirement income that covers about 80 to 90% of your current pre-retirement income.
What Is the 4% Retirement Rule?
The 4% rule helps you know how much you can safely withdraw from your retirement savings each year. Here, you add up all your savings and withdraw only 4% of that total during your first year of retirement.
Which Retirement Plan Is Best for Bangladeshis?
Which plan will be best depends on your income and risk comfort. Below is a quick comparison.
| Annuities | Savings Schemes |
|---|---|
| It offers fixed monthly payments after retirement | It offers flexible savings with potential for higher returns |
| It has low risk | It has a moderate risk |
| Annuities are ideal for retirees | Savings Schemes are great for long-term savers |
HR software simplifies retirement planning by automating benefit calculations and ensuring compliance. With clear data, employees can then choose between stable options like annuities or flexible growth plans like savings schemes.
Final Words
Employers stay compliant with the retirement age laws and pay pensions on time. They should ensure the accuracy of pension scheme contributions. This compliance protects the rights of the workers and secures their financial benefits after retirement. Plus, it helps the organizations to avoid legal penalties and ensure a good reputation.
