Employee Fund Management in Bangladesh

Employee fund management encompasses various types of funds, including provident funds, pension funds, gratuity funds, and profit participation funds.

According to the Provident Funds Act of 1924, a provident fund is defined as “a fund in which subscriptions or deposits from employees are received and held on their individual accounts, including contributions and any accrued interest.”

Under the Bangladesh Labour Act of 2006 (amended in 2013), all companies, including banks, are required to allocate 5% of their profits before expenses to eligible employees within a specified timeframe. However, some banks have sought legal opinions indicating that they are not obligated to make provisions for the Workers' Profit Participation Fund (WPPF), citing conflicts with the Bank Company Act of 1991.

Many organizations are now investing these funds in share markets, government bonds, and fixed deposits to generate profits for employees. Additionally, employees can borrow from these funds, with repayments added to their individual provident accounts.

As managing provident and gratuity funds becomes essential for attracting and retaining talent, organizations face increased responsibilities in accounting and administration. Many companies maintain separate accounts for these funds and conduct audits to ensure transparency for employees.

To benefit from tax exemptions, organizations must have their provident funds recognized by the government. Only authorized funds qualify for tax benefits, while employees will be liable for taxes on any recognized provident fund amounts received.

We offer professional advice on managing employee funds, including investment strategies and compliance with regulatory requirements. Our commitment includes providing necessary documentation and support during external audits to ensure a smooth process.