The current Old Age Allowance will be renamed as the Citizens’ Pension, since it is an entitlement available to those elderly Bangladeshis who are poor or vulnerable to poverty. The main characteristics of the Citizens’ Pension will be:

• It will be accessible to all elderly citizens (age 60 plus) of Bangladesh who meet the income criteria (income below 1.25 times the upper poverty line).
• The initial transfer value of the Citizens’ Pension will be Tk.800 per month. While this is a significant increase on the current value of the Old Age Allowance, relative to the value of similar pension schemes in other developing countries it is modest. It is, however, set at a sustainable value for national finances. The transfer value will be indexed to inflation.
• At age 90 years, the value of the pension will be increased to Tk.3,000 per month. While this will benefit few people and will be minimal cost, it should increase incentives across society for people to care for the elderly, to ensure that they reach age 90 and receive the significantly higher benefit. This may, in fact, reduce health costs, thereby bringing savings to the national exchequer.

Income eligibility will be assessed on the basis of a Proxy Means Test, to be determined prior to the inception of the Citizens’ Pension. As an individual benefit, older people must be assessed on the basis of their personal incomes and not that of their household. It is recognised that a number of eligible older people may not have accurate birth dates on their identity cards. The Government will, therefore, establish an appeal mechanism for those who believe that they have been unfairly excluded from the Citizens’ Pension on the grounds of income or inaccurate documentation. The Government will also establish penalties for those who falsify their age to make an illegitimate claim for the pension.

The Citizens’ Pension will substantially increase the effectiveness of current social protection spending. It is also expected that the additional benefits been observed in other countries with similar schemes, such as significant increases in the health and dignity of older people, will happen in Bangladesh. Furthermore, one could expect to see positive impacts on other members of their extended families – in particular children – since older people are likely to share their pensions with others while working families will be able to direct a higher proportion of their resources to their own children.

Income eligibility will be assessed on the basis of a Proxy Means Test, to be determined prior to the inception of the Citizens’ Pension. As an individual benefit, older people must be assessed on the basis of their personal incomes and not that of their household. It is recognised that a number of eligible older people may not have accurate birth dates on their identity cards. The Government will, therefore, establish an appeal mechanism for those who believe that they have been unfairly excluded from the Citizens’ Pension on the grounds of income or inaccurate documentation. The Government will also establish penalties for those who falsify their age to make an illegitimate claim for the pension.

The Citizens’ Pension will substantially increase the effectiveness of current social protection spending. It is also expected that the additional benefits been observed in other countries with similar schemes, such as significant increases in the health and dignity of older people, will happen in Bangladesh. Furthermore, one could expect to see positive impacts on other members of their extended families – in particular children – since older people are likely to share their pensions with others while working families will be able to direct a higher proportion of their resources to their own children.

The Ministry of Social Development8 will prepare a detailed implementation plan for the Citizens’ Pension and submit to the Cabinet for approval by December 2014. The new pension programme will start in July 2015 and be introduced over a period of three years, prioritising initially those areas of the country with the highest proportions of elderly people living in poverty.