Bangladeshi govt orgs break rules, use public money to fund pensions for years
In FY 23, the government spent Tk1,101 crore for pension of these bodies
The Finance Ministry has frozen the pension funds of 12 state-owned and autonomous institutions including public universities, Bangla Academy, National Museum etc. that have been providing pension and retirement benefits to their employees from government allocations for years without approval from the Finance Division.
Experts say it signals major irregularities in the handling of public money.
That is not all. The irregularities in pension schemes of state-owned and autonomous institutions misappropriating public money run even deeper. The Business Standard has information of such practice from as far back as 2000.
Thirteen more institutions in the same category, authorised to establish benefits with their own income, have been found using government funds for such benefits. Their pension scheme funding has been partially suspended and they have been directed to establish the scheme using their own resources.
Keep updated, follow The Business Standard's Google news channel
In the last financial year alone, the government spent a total of Tk1,101 crore for pension and retirement benefits of these institutions.
In the revised budget of the last financial year, Tk779.32 crore was earmarked for the pension fund of the institutions, including Tk688.95 crore for public universities, according to finance division officials.
But the division has not allocated any funds for their pension schemes in the budget for the current financial year. The ministry has opted to grant gratuity benefits to future employees of these 12 institutions in lieu of pension benefits, they say.
Officials say over the years, these 25 institutions have unlawfully allocated operating budget funds to pensions without detection by the Finance Ministry. However, following the revelation of these issues at the end of the last financial year, the ministry has taken strict measures to address the situation.
According to the directives issued by the Cabinet Division in 1999, state-owned and autonomous institutions can initiate pension benefits for their employees with their own income with prior approval from the finance division.
Mahbub Ahmed, former senior secretary of the Finance Ministry, told TBS that the finance division should have identified this issue sooner, during the audit report.
He said if these institutions had scrutinised their budget allocations and expenditures during annual budget preparations, such discrepancies could have been averted. "It is a weakness in the oversight of the finance division."
Mahbub Ahmed said the institutions have unquestionably breached financial regulations, and the finance division should enforce stricter measures to curb such irregularities.
The former secretary added that it is challenging due to various factors including political pressure.
Meanwhile, 14 other government entities submitted proposals to the finance division to implement pension schemes for their employees. However, these were not approved due to the institutions' incomes being considerably lower than their expenditures.
However, the pension schemes of 17 institutions operating under their own income will continue with approval from the finance division.
Irregularities in pension scheme fund
Of the government funds allocated for pension schemes in the last fiscal year without approval, Tk689 crore was specifically expended on public universities.
Additionally, other institutions involved in this irregularity include the Bangladesh Council of Scientific and Industrial Research, Bangladesh Agriculture Research Institute, National Museum, Bangla Academy, National Sports Council, Shilpakala Academy, University Grants Commission, Bangladesh Public Administration Training Centre, and others.
Among the 13 institutions approved for self-funded pension schemes but operating government-funded pensions, high profile ones include the Bangladesh Water Development Board, Bangladesh Inland Water Transport Authority (BIWTA), Bangladesh Handloom Board, Bangladesh Rice Research Institute, Bangladesh Academy of Rural Development, Bangladesh Rural Development Board etc.
The Water Development Board expended the highest Tk215 crore from government funds for these purposes in the last fiscal year. The board obtained approval to initiate a pension scheme in 2000.
Similarly, in 2014, BIWTA secured approval to launch a pension scheme with its own funds. The revised budget for the last financial year allocated Tk30 crore for this.
The Bangladesh Industrial Technical Assistance Centre and Bangladesh Trade and Tariff Commission, authorised for self-funded pension schemes, utilised approximately Tk11 crore from government funds for the pension scheme in the last financial year.
According to finance division officials, the institutions' independent financial capacity plays a crucial role in approving their pension schemes. For institutions contemplating relying on regular annual grants from the government as a potential source for the pension fund, their future financial liability for the schemes will ultimately burden the government.
An official from the finance division said it is not appropriate to implement a pension scheme for employees of autonomous institutions that have received loans or equity from the government and are currently unable to repay those loans or fulfil dividend obligations to the government.
14 orgs without sufficient income want pension scheme
The Finance Division has declined the Bangladesh Small and Cottage Industries Corporation's application for approval to implement pension and retirement benefits for its employees.
According to sources, introducing the pension facility would require Tk837 crore over the next 20 years based on the current pay scale, whereas the existing gratuity scheme for employees amounts to Tk250 crore over the same period.
Finance division officials note that BSCIC's annual income is Tk35 crore, with expenditures at Tk229 crore. As the institution relies heavily on government funding and received a grant of Tk189 crore in the last fiscal year, introducing a pension scheme would further increase its dependence on the government.
The finance division has withheld approval for the proposed pension scheme of the Bangladesh Land Port Authority. The division cited financial viability but noted non-compliance with Cabinet Division conditions.
Additionally, among the 24 land ports, seven are self-managed, and six are operated by private entities. If the authority oversees all 24 land ports in the future, the institution's manpower management costs are expected to rise significantly.
The Finance Division similarly denied applications from the Bangladesh Agricultural Research Council, Bangladesh Institute of Nuclear Agriculture, and Bangladesh Agricultural Development Corporation to initiate pension schemes.
Other institutions facing disapproval for their pension scheme proposals include the Bangladesh Inland Water Transport Corporation, Water Resources Planning Organisation, Bangladesh Board of Unani and Ayurvedic Systems of Medicine, Bangladesh Employees Welfare Board, National Book Centre, Bangladesh Atomic Energy Commission etc.
