Fast growing old people bring new economic challenge

It started with Tk 100 a month in 1998. Now it stands at Tk500.

Not a big amount. But it reminds 44 lakh elderly people once every month that the state does not forget them.

It gives them a sense of dignity in family, a financial independence on small personal expenses like buying "medicine or betel leaf for themselves, or gifts for grandchildren," as a UNDP-PPRC survey points out. 

The number of people of 60 years or above is growing fast, at a rate 4.41 percent a year—fastest in South Asia. 

The economics of living longer

A growing number of senior citizens means the share of working age people will be lower. Fewer people will have to work more to keep up the economic growth momentum. 

More resources will be needed to pay for pensions and social welfare for elderly people. 

Total safety net programmes account for 2.58 percent of GDP now. 

More pension and healthcare spending for senior citizens will require more allocation of resources.

But a tax-GDP ratio of 10 percent - lowest in South Asia - limits the state's ability to spend more in welfare.

Higher tax-GDP ratios help developed countries spend more on healthcare, welfare and human resources development.  

Again, the onus will be on the youth, who are in 18-35 years' age group and who make up 33 per cent of Bangladesh's total population. 

They will have to work more, earn more and pay more taxes to help the exchequer invest more on skill development and productivity enhancement.

Allocation for health this year represents a little over 1 percent of GDP, while India spends nearly 4 per cent of its GDP on health services. Spending on skill development, including education and training now, stands a little over 3 percent of GDP.

More investment in those areas will require more resources.

So ensuring a better life in old age calls for a revisit of the whole economic and development policies, which still do not include aging population as a priority.

The old age allowance remains the only arrangement the annual budget has for senior citizens, for the last 21 years.

However, the budget has another mention of old people. It exempts them from tax for annual income up to Tk3 lakh, while the threshold is Tk2.5 lakh for others.

But a monthly income of Tk25,000 to enjoy tax break is not even a distant dream for the majority of an estimated 1.15 crore people who turned or crossed 60.

Old age allowance covers 27 percent of them, while another four percent comes under the government's pension scheme. 

Elderly people are seen sitting in a old home. Photo: Saikat Bhadra

It means 69 percent of elderly people stay out of any such support, reveals a study of HelpAge International Bangladesh, the local chapter of UK-based global network for advocating old people's rights.  

It points out that old-age allowance in Bangladesh is one of the lowest in the region and the world, and less than half the value of Nepal's. 

It points to flaws in selection of beneficiaries of the allowance and said many beneficiaries are below the age of eligibility, while around half of the intended beneficiaries miss out.

The study suggested that more universal social pensions, like those in Nepal and Thailand, could have been extremely effective for Bangladesh in reaching the very poorest older people.

A Citizen's Pension would be affordable today and in the future. 

Bangladesh could also start a universal pension at a higher age, such as 70 years or 75 years, and progressively reduce the age of eligibility over time, the HelpAge study said.

This year's budget allocates Tk 2640 crore for monthly allowance for 44 lakh people. The amount is around 0.13 percent of GDP. 

A universal pension of Tk 1000 would cost a little over 1 percent of GDP, it said. The civil service pension currently costs around 0.5 percent of GDP, roughly five times the expenditure on old age allowance.

The idea of "Citizen's Pension" was mooted in the National Social Security Strategy (NSSS) of the Planning Ministry in 2015 for people aged 60 years and above.

It also proposed introduction of a National Social Insurance Scheme with contribution from the private sector to support old people.

But those did not see any progress until this year's budget which stated that a 'Universal Pension Authority' will be formed soon for gradual introduction of universal pension for everyone, including all employed in formal and informal sectors of the economy. 

The government spends 0.13% of GDP on old age allowance, and it would require about 0.34% of GDP to cover all older people aged 65 or above. 

Doubling the rate would require 0.64%, still less than around 1% of GDP allocated for social pensions in many countries, pointed out Sharifa Begum, Senior Research Fellow of Bangladesh Institute of Development Studies (BIDS), in her study titled" Old Age Allowance Programme of Bangladesh: Challenges and Lessons."Given the strength of Bangladesh's economy, such a universal pension can be sustainable, she believes. 

Blessing or cause for concern?

Life expectancy at birth was 65 years in 2006, which is currently 72.8 years. 

Elderly people are seen talking to each other in old home. Photo: Saikat Bhadra

Living a longer life is a blessing, but it means longevity risks as well, if financial support is not ensured.

Old age complications develop at this age, requiring more healthcare. Working age ends for many people, their earnings stop, but living costs go up.

Even for those who are physically sound, getting a job or earning for himself or herself is not that easy at this age. In total, 64 per cent of men and 13 per cent of women aged 60 and over are in employment, but earning is not as much as their younger peers, says the HelpAge study.

The Parents Care Act was passed in 2013, while the social welfare ministry enacted Parents Care Policy to make sure grown-up and earning children take care of their parents.

While the tradition of family support is strong, high levels of poverty and vulnerability limit the amount of support children can provide to their older parents. Four in five older people (80 percent) live with one of their children, and only a small minority have no children at all. However, many of these families find it difficult to make ends meet, the HelpAge International study further said.

So, having no money remains a real threat for old age in the absence of adequate support from the family and society.

Many children do not earn enough to bear the expenses of parents. They cannot simply afford even if they desire to. The state has to take more responsibility here," says economist Prof Bazlul Huque Khondaker.

While old age allowance needs to be expanded, more old homes should be there to shelter senior individuals who are without children or whose children stay away. "Such centres should be built at union levels too, so that the elderly can gather there and find company," said the Dhaka University's professor of economics.

He appreciated the government's decision to introduce universal pension for private sector employees, and stressed that such a scheme should cover informal sector workers. 'If needed, the government should pay the initial premium itself," suggested Prof Bazlul Khondaker, who researched old age issues extensively.

No status yet

Senior citizens deserve some status and recognition, which the society owes them for their services.

But there is no official status for them yet.

The cabinet in 2013 approved a regulation recognizing people of 60 years of age or above as "senior citizens." It was decided that elderly citizens will be entitled to a number of benefits so that they can have a dignified and healthy life.

They will be given identity cards, health cards, old home and day care centres.

They will get discount and reserved seats on bus, train and planes.

Government old home at Dhaka. Photo: Saikat Bhadra

But those did not happen in last six years.

State Minister for Social Welfare Sharif Ahmed in April said the social status of senior citizens must be determined. 

He did not say how and when.

Bangladesh is now enjoying a "bonus period" in population with people of working age group accounting for two-thirds of the country's total population. 

But the youth will be outnumbered by the ageing people by 2046, forecasts Prof AKM Nurun Nabi, who teaches population sciences at Dhaka University.

"Life expectancy is growing, so the number of people on the other side of 60 is going up. If we cannot turn demographic dividend into economic dividend, then it will be an ominous sign for our future," he warned.

In 2025, one in every 10 people will be 60 or above, and in 2050, one in every five, or 20 percent people, will be older.

"So, it's not too far away when we are going to be an ageing society. We may not live that long, but you will feel the pinch," Prof Nurun Nabi said.

Apart from old age allowance and universal pension, he suggested that old people could be engaged in cottage industries to stop the heritages from depleting and to instill enthusiasm in senior citizens. The country's healthcare system should have in-built mechanism to take extra care of senior people, he added.

Saving for the future

A monthly expenditure of Tk 10,000 today will shoot up to Tk 40,000 after 20 years, when a man of 40 now will reach his retiring age. 

Only savings of today can help in bad times ahead.

But the scope for secured savings for old age are limited. National savings certificates remain the only option. In countries like India, there are instruments like provident fund and pension fund which offer better yields than banks for elderly people.  The yields are tax free.

An elderly man is seen standing in front of the old home. Photo: Saikat Bhadra

Of late, banks are coming up with some savings products with insurance coverage targeting clients in their 40s.

Dhaka Bank is one of them. Its 'Honourable Seniors' scheme offers insurance backed savings account designed to empower senior citizens to live with dignity and confidence. It is insured by MetLife Alico. 

Whatever meagre the start-up may be, the corpus will grow into an amount in 20 years--- not small to buy at least an apple a day at the age of 60.