How is the Social Insurance set up in Bangladesh?

Bangladesh does not have a comprehensive social security system, which means that there are no mandatory social insurance contributions or deductions apart from standard income tax obligations. Here’s an overview of the current social insurance landscape and optional benefits in the country:


Social Security System

  • No Mandatory Contributions: Bangladesh does not have a national social security system that mandates employer or employee contributions. As a result, there are no statutory social insurance deductions such as for pensions, unemployment insurance, or disability coverage.


Provident Fund and Gratuity

  • Optional but Common Practice: While not mandated by law, the Provident Fund and Gratuity are commonly practiced in companies like New Horizons in Bangladesh. These are considered beneficial practices to provide financial security and benefits to employees.

    • Provident Fund: This is a savings scheme where both the employer and employee contribute a portion of the salary to a fund. The accumulated amount is paid out upon retirement, resignation, or as per company policy. Although not a legal requirement, it is a standard practice to help employees build savings for the future.

    • Gratuity: Gratuity is a lump sum payment made to employees who have completed a specified period of continuous service with the company. It is a form of severance pay that acknowledges long-term service and is typically paid out upon resignation, retirement, or termination of employment.


Current Practice with Horizons

  • New Horizons: Horizons offers both Provident Fund and Gratuity as part of our employment benefits. These funds are managed internally and provide employees with additional financial security.

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