Monthly profit payout proposed for Pensioner Savings Certificates

The National Savings Directorate has proposed a monthly profit payout of Pensioner Savings Certificates instead of the current quarterly basis.

The directorate recently sent a letter to the finance ministry in this regard.

Pensioners who hold savings certificates often use the profits they earn to cover their daily household expenses. In the face of increasing inflationary pressure, they have repeatedly requested the directorate that the profits be paid out on a monthly rather than quarterly basis.

Director of the National Savings Directorate Mohammad Shah Alam said the directorate has submitted a proposal to the ministry in response to the demand.

Currently, there are four types of savings certificates available in the country and only the Family Savings Certificate pays profits on a monthly basis. The profits for the three-month Profit-bearing Savings Certificates, Pensioner Savings Certificates, and five-year Bangladesh Savings Certificates are paid out every three months.

In addition to the monthly payout, the directorate has called for raising the savings tools buying ceiling to Tk1 crore from current Tk50 lakh.

It has also proposed pensioners' savings schemes for public and private employees amounting to their retirement benefits. The age limit for male buyers of the family savings certificate has also been proposed to be lowered to 50 years from 65. This will allow more males to be eligible for family savings schemes.

The existing rules are also being revised to allow more companies to invest in Bangladesh Savings Certificates, according to the savings directorate.

The Savings Department has justified the proposal to lower the age limit for purchasing family savings certificates from 65 to 50 years due to the fact that many government employees retire at the age of 59, but are currently unable to purchase savings tools with their pension benefits due to the age bar.

This issue affects private employees as well, since many pass away before reaching 65 – the average national life expectancy.

Besides, the manually issued five-year Bangladesh Savings Certificates can now be issued manually in duplicate. The Internal Resources Division recently provided its opinion on this matter to the Finance Division.

There has been a net withdrawal of Tk36,549 crore from savings certificates in the first five months of the fiscal year, while new investment during that time was Tk34,934 crore, according to the central bank.

This is likely due to inflationary pressures that have caused people to withdraw their money in search of higher returns or to protect their purchasing power.

The government had set a borrowing target of Tk35,000 crore from savings certificates for the year, but according to the Bangladesh Bank, there was a net withdrawal of Tk1,610 crore more than new investments in savings certificates in the July-November period of the current fiscal year.

During the same period last year, the government's net borrowing from savings tools was Tk10,025 crore, and in the first five months of the previous fiscal year, it was Tk 19,044 crore.