Bangladesh Plans Shariah-Based Pension Scheme Under Universal System
The government is preparing to introduce a Shariah-based pension scheme under Bangladesh’s Universal Pension System, which gives citizens an option designed to follow Islamic financial principles.
In a Nutshell
- The National Pension Authority (NPA) has approved a proposal to introduce a Shariah-based pension scheme under the Universal Pension System.
- The government will prepare a draft law and send it to Parliament for approval.
- A separate framework is being developed for Shariah-compliant investment, fund management, profit distribution and risk management.
- The new scheme is being developed with assistance from the Asian Development Bank (ADB) and local consultants.
- An actuarial study will also be carried out to assess its long-term financial sustainability.
- The scheme is intended to provide an additional pension option for people who want their retirement savings to follow Islamic financial principles.
Context
A Shariah-based pension system generally means that retirement savings are invested through financial arrangements that follow Islamic principles which includes avoiding riba, or interest, excessive uncertainty and investments in businesses that are considered prohibited under Shariah. Depending on the structure, funds can instead be placed in Shariah-compliant assets and profit-sharing arrangements such as Mudarabah, Musharakah or Sukuk, with Shariah advisers or boards overseeing compliance.
Bangladesh introduced its Universal Pension System in August 2023 through four schemes Probash, Pragati, Surakkha and Samata covering expatriates, private-sector workers, self-employed people and low-income citizens. However, unlike the present one, it was not a Shariah-based pension scheme. The existing Universal Pension System invests contributors’ money in government treasury bonds, while returns get distributed to pensioners based on their investment period. As of September 5, 2026, more than 379,000 people had registered across the four existing Universal Pension schemes, according to the National Pension Authority.
Why It Matters
More than a change in investment policy, it is an expansion of participation in a pension system because it also brings in people into the pension system who may have avoided the earlier options as they did not consider their investment structure compatible with their religious principles. Moreover, under a Shariah-based pension scheme “interest” cannot be simply replaced with “profit”; the money has to be invested through arrangements that actually comply with the relevant principles.
What We Think
The new pension scheme is a valuable addition to Bangladesh’s pension system because integrating Shariah-based options into Bangladesh’s pension system expands retirement planning while respecting religious principles.