http://cbr.sagepub.

com/
Compensation & Benefits Review
http://cbr.sagepub.com/content/45/1/40
The online version of this article can be found at:

DOI: 10.1177/0886368713487039
2013 45: 40 Compensation & Benefits Review
Bidhan Chandra Mazumder and Mita Mazumder
Employee Benefits in a Nonprofit Organization: A Study of Chittagong University

Published by:
http://www.sagepublications.com
can be found at: Compensation & Benefits Review Additional services and information for

http://cbr.sagepub.com/cgi/alerts Email Alerts:

http://cbr.sagepub.com/subscriptions Subscriptions:
http://www.sagepub.com/journalsReprints.nav Reprints:

http://www.sagepub.com/journalsPermissions.nav Permissions:

What is This?

- May 10, 2013 Version of Record >>

by guest on June 10, 2014 cbr.sagepub.com Downloaded from by guest on June 10, 2014 cbr.sagepub.com Downloaded from
Compensation & Benefits Review
45(1) 40 53
2013 SAGE Publications
Reprints and permissions:
sagepub.com/journalsPermissions.nav
DOI: 10.1177/0886368713487039
cbr.sagepub.com
Benefits Management
Introduction
Employees are the mainstay of an organization. This is
particularly true in a university. To recruit and retain a
well-qualified workforce, different kinds of consider-
ations are provided by employers to recognize the value
of employees and their contributions in the form of
compensation and benefits. Salary and other cash pay-
ments and benefits are provided to employees in return
for performing their job. Common examples of benefits
are insurance (medical, life, dental, disability, unem-
ployment and workers compensation); vacation pay,
holiday pay, and maternity leave; funds for retirement;
profit sharing; stock options and bonuses. (Profit shar-
ing, stock options and bonuses are forms of compensa-
tion in most regions.)
Benefits may be tangible or intangible. The examples
of benefits given above are tangible benefits. Intangible
benefits include a broad range of practices: appreciation
from a boss, likelihood for promotion, nicely decorated
work areas, arranging social events and festivals for rec-
reation and so on.
1
A broad definition of employee benefits
2
includes a
number of policies, practices and plans related to the fol-
lowing five categories of employer payments or costs:
1. Legally required social insurance payments:
These include employers contribution to social
security, government-provided medical insur-
ance, unemployment compensation insurance,
workers compensation insurance and temporary
disability insurance programs.
2. Payments for private insurance and retirement
plans: Benefits are provided for personal loss
exposures such as old age, dental expenses, death,
legal expenses, disability income, property dam-
age, medical expenses and liability judgments.
3. Payments for time not worked: These include
vacations and holidays, maternity leave, sick
leave and jury duty.
4. Extra cash payments to employees: Benefits in this
category include educational expenses allowances,
savings plans, moving expenses, holiday bonuses,
current profit-sharing payments and suggestion
awards.
487039CBRXXX10.1177/0886368713487039Compensation & Benefits Review 45(1)Mazumder and Mazumder
research-article2013
Corresponding Author:
Bidhan Chandra Mazumder, Department of Accounting and
Information Systems, University of Chittagong, Chittagong 4331,
Bangladesh.
Email: bcmazumder@yahoo.com
Employee Benefits in a Nonprofit
Organization: A Study of Chittagong
University
Bidhan Chandra Mazumder, Assistant Professor, University of Chittagong;
and Mita Mazumder, Lecturer, BGC Trust University
Abstract
Every concern should ensure proper administration of social security programs. In Chittagong University, employee
benefits are controlled by University rules and regulations, which are framed in line with the policy of the Government
of Bangladesh. It is a public university having an autonomous character. Both in-service (or active) and retirement
benefits are provided to employees. Some nonmonetary benefits are also provided during the active period, including
basic salary, house rent, medical allowance, bonus, book allowance, medical and other loans and retirement benefits.
The latter include provident fund, gratuity/pension benefits, group insurance, leave payments, benevolent fund and
so on. Nonmonetary benefits generally include medical care, subsidized transport, leave without pay and so on. This
article confirms that employees are satisfied with the benefits, but the impression of their experience when they apply
for retirement benefits is somewhat negative and their concerns need to be addressed.
Keywords
employee benefits, in-service benefits, retirement benefits, monetary benefits, nonmonetary benefits, nonprofit
organization
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
Mazumder and Mazumder 41
5. Cost of services to employees: These include items
such as subsidized cafeterias, adoption assistance,
recreation programs, wellness programs, clothing
allowances, day care centers, financial counseling,
transportation benefits and retirement counseling.
In Bangladesh, employers provide both tangible and
intangible benefits. These are governed by rules and
regulations of the particular enterprise and are generally
framed in line with government and enterprise policy. In
such a context, the Bangladesh Accounting Standards
(BAS)
3
provide a list of tangible benefits. According to
BAS 19, employee benefits include the following:
1. Short-term employee benefits, such as wages,
salaries and social security contributions, paid an-
nual leave and paid sick leave, profit sharing and
bonuses and nonmonetary benefits (e.g., medical
care, housing, cars and free or subsidized goods or
services) for current employees
2. Postemployment benefits such as pensions, other
retirement benefits, postemployment life insurance
and postemployment medical care
3. Other long-term employee benefits, including
long-service leave or sabbatical leave, jubilee or
other long-service benefits, long-term disability
benefits and, if they are not payable wholly within
12 months after the end of the period, profit shar-
ing, bonuses and deferred compensation
4. Termination benefits
5. Equity or share ownership benefits
For the employees of Chittagong University, which is a
nonprofit organization (see www.referenceforbusiness.
com/small/Mail-Op/Nonprofit-Organizations.html), it is
seen that benefits are important to motivate better perfor-
mance. Keeping this in mind, the authors have attempted to
examine the management and effectiveness of the benefits.
Scope of the Study
The University of Chittagong is a government-funded
and independent nonprofit organization. At the end of
2011,the University had 2,616 employees (including 690
members of the faculty, 290 officers, executives and man-
agers, 472 third-class employees and 1,164 fourth-class
employees) to support the academic mission.
4
This study
pertains to all types of employees.
Study Objectives
The objectives of the study are the following:
1. To highlight the different types of employee ben-
efits, that is, in-service benefits, postretirement
benefits and non-monetary benefits (if any)
offered by the University
2. To critically examine the status of the postretire-
ment benefits
3. To suggest steps to improve the management of
the funds applied for future benefits
Method
The study is based on primary data coupled with some
secondary information assembled in a review of the lit-
erature along with relevant rules and regulations. Primary
data have been collected by interviewing University offi-
cials. As to postretirement benefits, interviews were con-
ducted with a sample of 40 retired employees (covering
10 teachers, 10 officers and 20 third- and fourth-class
employees) along with officials of the accounts section.
As to secondary data, different books, articles from the
Internet, Bangladesh Accounting Standards, Chittagong
University diary, Chittagong University statutes regard-
ing benefits, Government Orders and other sources have
been consulted for necessary information as an aid to the
analysis. Data were collected for the academic years
2006-2007 to 2010-2011 and the tabular method was
used for the analysis.
Findings and Conclusions
This section of the study has been divided into two parts:
(a) an overview of the benefits and (b) an in-depth review
of the postretirement benefits. In the first part, the authors
describe the nature of the different types of benefits offered
by the University to its employees with the payment sys-
tem, and in the second part, they examine the present status
of the benefits, particularly the postretirement benefits,
offered by the University because of the importance of
these benefits. The base salary and nonmonetary benefits
are usually provided to active employees, but postretire-
ment benefits are completely related to the future. Prudent
fund management in this regard is required for the support
and betterment of retired employees.
Part 1: Overview of the Benefits
Both in-service and retirement benefits are offered by
the University to its employees. Some nonmonetary
benefits are also being provided to the employees. Table 1
shows the different types of in-service, postretirement
and nonmonetary benefits offered by Chittagong
University. In combination, these might be referred to as
total compensation.
In-Service Benefits. In-service benefits are the current
remuneration for active employees, typically paid in
cash, available services and insurance protection by the
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
42 Compensation & Benefits Review 45(1)
University to its employees. The several in-service bene-
fits are described below.
Basic salary. Basic salaries to the employees are pro-
vided monthly on the basis of set pay structure in line
with the government rules of salary.
5
House rent allowance. The employees receive house
rent allowance with their monthly basic salary at the rate
applied for the Metropolitan area as set in the National
Salary Scale 2009. In addition, those who are enjoying
the residence facilities provided by the University have
also been given house rent allowance since July 1, 2010,
coupled with a salary deduction made equivalent to 7.5%
of basic salary plus a certain rate of rent per square foot
for their residence.
6
But there is an unanswered question related to this
type of benefit since the government has not decided how
it will be treated. Consequently, the beneficiaries of the
allowance may face a risk of giving back the money they
are enjoying now at the time of retirement or other termi-
nation. We note there is an instance of such requirement
that was mandated.
7
Furthermore, it is to be noted that professors who
hold higher posts, for example, Vice Chancellor, Pro
Vice Chancellor, Dean, Provost, Proctor, Registrar,
Controller of Exam and so on, are required to pay only
the rent on the basis of square foot but not 7.5% of basic
salary.
Medical allowance. Medical allowance is being paid
with the monthly basic salary as per the National Salary
Scale 2009.
Bonus. Yearly festival bonuses are paid (a) in two Eids
equivalent to 1 month basic salary paid to Muslims and
(b) once, equal to 2 months basic pay on Puja to the Hin-
dus and on the largest religious festival to the Buddhists
and the Christians. These are not performance related.
Book allowance. Book allowance of TK2,000 (TK =
Bangladeshi taka) is paid once in a year to professors at
the beginning month of the fiscal year.
Rest and recreation allowance. Rest and recreation
allowance was started with effect from 1979 according to
a government order. It includes current 1 month basic sal-
ary and a 15-day deduction from earn leave, given every
3 years in service. But at present, 15-day deduction from
earn leave is waived.
8
Income tax benefit. Tax on the yearly income from
salary of the employees is being paid by the University
according to the government rule.
Table 1. Different Types of Benefits Offered to University Employees.
Active employee benefits Postretirement benefits Nonmonetary benefits
1. Basic salary 1. Preparatory to retirement leave 1. Medical care
2. House rent allowance 2. Subsidized transport
3. Medical allowance 2. Provident fund 3. Leave without pay
4. Bonus 3. Pension/gratuity a. Study leave (extraordinary)
b. Leave under lien
4. Leave encashment
5. Book allowance 5. Benevolent fund
6. Rest and recreation allowance 6. Group insurance
7. Income tax benefit 7. Medical fund
8. House rent allowance to
deceaseds family
8. Medical assistance 9. Contractual reappointment
a. Aid to sick employee a. Professor emeritus
b. Medical loan b. Supernumerary
c. Reimbursement of medical expenses c. Reappointment officer
d. Health insurance for teachers
9. Benefit from Welfare Trust
10. Leave with pay
a. Casual leave
b. Earned leave
c. Medical leave
d. Study leave
e. Sabbatical leave
f. Maternity leave
Source. Data provided by officials of the accounts section.
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
Mazumder and Mazumder 43
Medical assistance. The University provides medical
support in the following forms to its employees.
1. Aid to sick employees: Sick employees get medi-
cal support to the extent of TK20,000. But fac-
ulty who are under the health insurance scheme
with Delta Life Insurance will not directly get
this benefit; rather their annual insurance pre-
mium is reduced by the amount of TK20,000
before making deduction for the insurance.
2. Medical loan: In order to cover expensive treat-
ments for the employee and family, an employee
can get an interest-free loan from the medical loan
fund to a maximum of 3 months basic salary, to be
repaid in 30 installments, or a loan of 6 months
salary repayable in 60 installments. This benefit
has been in effect from 1995.
9
3. Reimbursement of medical expenses: This benefit
is provided to regular employees of the University
to cover medical expenses incurred by them
10
and
their dependent family members. The reimburse-
ment must be in a recognized clinic and must not
exceed the rate in force in a government hospital.
4. Health insurance for faculty: Faculty and their
spouses have been enjoying the benefit of
health insurance policy with Delta Life
Insurance since September 15, 2009. Before
this arrangement, they were provided a tradi-
tional health grant of TK20,000 each, once in
the service period. The holders of this health
insurance policy will get medical benefits to
the extent of TK500,000 for his or her own ill-
ness and TK500,000 for his or her spouses ill-
ness in a year on submission of necessary
medical reports and bills and fulfillment of
other related terms and conditions.
Benefit from Welfare Trust. The Chittagong Univer-
sity Employees Welfare Trust Fund was formed with
an initial grant of TK1,000,000 with a view to provide
suitable financial assistance to the regular employees of
the University or their families in the following cases:
1. Death of any employee of the University during
service
2. Grave illness or serious injuries of an employee
himself or herself or any of his or her family
members
3. Unusual loss of property due to fire or other cause
deemed fit to be considered by the Board
In the event a relative dies, an amount of TK5,000
maximum from this fund is provided to the employee for
transporting the body to the individuals residence.
The fund is administered by a board of trustees con-
sisting of the Vice Chancellor as a chairman and 10 addi-
tional members including the Pro Vice Chancellor, the
Registrar, the Comptroller of Accounts and the President
of the associations of the faculty, officers and staff.
Other sources of the fund are the contribution of the
employees from their monthly basic pay, voluntary gifts,
donations and other grants from the Government of the
Peoples Republic of Bangladesh or other organizations,
grants made by the University from time to time and all
income arising from the investment of the fund.
Leave with pay. The University offers the following
types of paid leave to its employees:
1. Casual leave: In order to meet unexpected need
for time off, the University permits employees to
enjoy 15 days casual leave in a year. Any days of
casual leave that remain unused during the year
are considered void.
2. Earned leave: An employee earns 33 days of
leave each year. Additional amount of leave more
than the casual leave limit if urgently needed can
be used from the balance of his or her earned
leave. The unused balance of days is then accu-
mulated to his or her account until the end of ser-
vice. After completing the qualifying service, the
employee will get cash benefit for maximum 12
months leave earned by him or her.
3. Medical leave: Employees who fall sick can use
medical leave for 30 days in a year subject to the
submission of a medical certificate/report. Unused
medical leave is accumulated to the employees
account but is not then paid in cash.
4. Study leave: Faculty can enjoy study leave to a
maximum of 4 years at a time and an additional
year, if needed, subject to getting award of the
degree, for conducting research studies either
home or abroad.
5. Sabbatical leave: Leave allowed by the University
to conduct research, apart from the research required
to satisfy degree requirements, is called sabbatical
leave. After completing the qualifying service and
other conditions set by the University, a professor
can enjoy a sabbatical leave for maximum of a year
on fulfilling conditions established for that leave.
6. Maternity leave: A female employee of the
University can enjoy maternity leave for 6
months. She is eligible for this leave a maximum
of two times during her service in the University.
Postretirement Benefits. Postretirement benefits are treated
as future benefits. A description of the different types of
post-retirement benefits provided by the University
follows.
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
44 Compensation & Benefits Review 45(1)
Preparatory to retirement leave. Employees are entitled
to enjoy 1 year PRL (preparatory to retirement leave) pre-
viously known as LPR (leave preparatory to retirement)
in the last year of their service period before retirement. A
University employee in addition to PR shall be entitled to
a lump sum amount in lieu of leave left over after availing
of PRL, not exceeding 12 months pay to be calculated on
the basis of basic pay drawn immediately before com-
mencement of PRL.
11
Provident fund. Chittagong University provides facili-
ties of provident fund to its employees who leave or retire
from the service or are determined to be unfit for further
service. Here a noncontributory provident fund is created
by the amount equivalent to 10% of basic salary contrib-
uted by the employees. All eligible University employees
who have opted for pension/gratuity and also the eligible
persons who have joined or join the University service on
or after July 1, 1974, shall join the fund as a compulsory
subscriber.
12
An amount of 60% of the deposit of the fund is sup-
posed to be invested by the Comptroller before the end of
each quarter, with the approval of the Vice Chancellor, in
profitable securities, subject to the approval of the finance
committee and the syndicate.
When a subscriber (employee) resigns or initiates the
PRL time off or is unfit for further service, the amount
credited to his or her account in the fund, with interest
but less any advances, loans and so on taken from the
fund and any deductions, is paid to the employee.
Pension/gratuity. Chittagong University Employees
Pension/Gratuity Statutes came into effect starting the
July 1, 1974.The pension/gratuity benefits under these
statutes become applicable to existing employees as on
June 30, 1974, with service calculated from the date of
initial employment with the University.
13
If an employee
of the University retires, resigns or is subject to discharge
owing to abolition of his or her post or dies after complet-
ing qualifying services of
1. 5 years but less than 10 years, he or she or the family
in case of his or her death may be granted gratuity
not exceeding 1 month last basic pay drawn for each
completed year of qualifying service.
2. 10 years or more, pension shall be paid to him or
her or the family in case of his or her death at the
rates as may be prescribed by the Government
from time to time.
Every employee of the University, entitled to a pen-
sion or gratuity benefit under the above statutes, nor-
mally has the right to retire after completing 25 years of
qualifying service provided that the syndicate may in
any special case on the ground of essential service
require an employee to complete his or her service up to
the age of superannuation. The payment of pension/gra-
tuity benefits under these statutes is made according to
University ordinance and regulations. In addition to the
pension benefit, each pensioner shall get the medical
allowance monthly and two festival bonuses yearly
equivalent to 1 month net pension each, as per rule.
In the event of the death of an employee (a) before
retirement, but after completion of a qualifying service
of 10 years or more, his or her family will get the pen-
sion for a period of 15 years at the normal rate of pen-
sion; or (ii) after retirement, but before the expiry of 10
years after retirement, his or her family will be entitled
to benefit of pension for the unexpired portion of the
period of 15 years counted from the date of retirement
of the employee.
In the above context, the calculation procedure of
pension benefits as followed by the University is shown.
Table 2 shows the rate of gross pension applicable to
the corresponding qualifying service dictated by the
Government and followed by the University.
In the case of an employee with 10 years or more of
qualifying service, the rule for the surrendered portion
of his or her pension is computed and paid as follows:
1. 50% of the gross pension will be payable to him
or her on retirement or to the family in the event
of death, calculated at the Government rates
shown in Table 3 for each taka of his or her pen-
sion surrendered.
14
2. The remaining portion of the gross pension will be
payable monthly, as prescribed by the Government.
3. If an employee wants to surrender his or her full
pension on retirement (or the family wants the
same in the event of his or her death), 75% of the
gross pension will be payable as a lump sum to
him or her (on retirement) or to the family (in the
event of his or her death) calculated at the
Government rate in (1) above.
Table 2. Pension Benefit Corresponding to Completed Years of Qualifying Service.
Years of qualifying
service
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and older
Pension expressed
as % of pay
32 35 38 42 45 48 51 54 58 61 64 67 70 74 77 80
Source. Chittagong University Calendar (Registrar of the University of Chittagong, 2003, p. 70).
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
Mazumder and Mazumder 45
Let us assume that an employee retires after com-
pleting 20 years of service from the University. At the
time of retirement, his basic salary was TK20,000. So,
he will be paid the pension benefit calculated in the fol-
lowing manner:-
Gross pension = TK20,000 64% = TK12,800
1. If he wants to enjoy a monthly payment of the
pension:
His net pension would then be 50% of gross pen-
sion, that is,
50% of TK12,800, that is, TK6,400.
So the amount of lump sum pension benefit pay-
able to him on retirement would be
TK6,400 TK200 = TK1,280,000
And the monthly pension will be TK6,400 plus the
medical allowance. In addition, he will be paid yearly two
festival bonuses equal to TK6,400 (net pension) each.
2. If he wants to surrender the full pension on
retirement:
Net pension would then be 75% of gross pension,
that is, 75% of TK12,800, that is, TK9,600.
So, the amount of pension benefit payable to him
as a final settlement would be
TK9,600 TK200 = TK1,920,000.
He will then get monthly medical allowance and
yearly two festival bonuses equal to TK6,400 (net
pension) each.
Leave cash payment. The University is required to pro-
vide a cash payment of any leave earned by an employee
to a maximum of 12 months at the rate of basic salary in
the month before the PRL.
If an employee wishes to go for voluntary retirement
after completing the qualifying service period of 25 years,
he or she is also entitled to a benefit equal to a leave max-
imum of 12 months salary.
15
Benevolent fund. The University has established the
Chittagong University Employees Benevolent Fund for
the benefit of the employees.
16
All regular employees
of the University, other than the persons older than
60 years when appointed, are eligible to receive ben-
efits from the benevolent fund. This fund consists of
employees monthly contribution from their salary, any
grant made by the University and the Government to
this fund, any donation made by any outside organi-
zation or individual or institution toward the fund and
all income, profits and interests from investments made
out of the fund.
If an employee of the University retires or leaves the
job after serving 15 years and has subscribed to the
benevolent fund for not less than 10 years, he or she will
be paid at a time an amount equal to his or her 6 months
basic salary, provided this amount shall not be less than
TK6,000. The fund is administered by a board of trustees
headed by the Registrar of the University with two syn-
dicate members and two senate members and all presi-
dents of employees association from each category. The
Comptroller of Accounts acts as Member-Secretary.
Group insurance. Group Life Insurance 1 and 2 consist-
ing of employees contribution from their monthly basic
salary is to provide financial support after death while
employed or at the time of retirement or leaving the service.
If an employee dies while actively employed, his or her
family or beneficiary will be paid the following amounts
17
:
Table 3. Rate of Pension Payable Per Taka of Gross Pension
Surrendered.
Completed years of qualifying
service
10-14 15-19 20 and
above
Rate of pension payable per taka
of gross pension surrendered
230 215 200
Source. Government of Bangladesh, Ministry of Finance, Finance
Department (1989).
National Life Insurance (from
July 1, 2000), Bangladeshi taka
Pragti Life Insurance (from
January 1, 2003), Bangladeshi taka
Total paid,
Bangladeshi taka
Professor/officer 100,000 100,000 200,000
Third-class employee 50,000 50,000 100,000
Fourth-class employee 30,000 30.000 60,000
Source. Data have been collected by the authors from officials of the accounts section.
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
46 Compensation & Benefits Review 45(1)
Otherwise, the employees will get back their full con-
tribution made as premium on retirement or at the time of
leaving service.
Medical loan fund. The medical fund was formed with
an initial amount of TK500,000 taken from the capital fund
with a view to provide financial assistance to employees for
medical purposes. Later on, annual deposits of TK100,000
from recurring fund of the budget have been deposited.
At present, TK50 from the professors monthly salary and
TK200 from the officers monthly salary are being depos-
ited to this fund (as per the decision made by the finance
committee and approved by the syndicate). After complet-
ing the qualifying service for retirement, an employee will
get the benefits of reimbursement of medical subscriptions
to this fund. Employees are also allowed to take medical
loan from this fund under some terms and conditions.
House rent allowance to deceaseds family. The Univer-
sity also provides a house rent benefit to the deceased
employees family. If an employee expires during the
service, his or her family will get a house rent allowance
2 years from the date of death at the rate then in effect.
Contractual reappointment. The reappointment of
retired employees is possible on a contract basis, with
the honorary titles: professor emeritus, supernumerary
teacher and reappointment officer. A brief description of
these types of benefits is given below.
1. Professor emeritus: After satisfying the requisite
qualifications, a retired professor can be consid-
ered for the post of professor emeritus by a spe-
cialized committee of five members (preferably
composed of other retired faculty) to be selected
from inland and abroad. The job tenure of a pro-
fessor emeritus will be continued until he or she
wishes to give up the role. He or she has no spe-
cific work but is expected to be involved with
research or supervising research and to refrain
from working in other institutions.
Apart from pension, a professor emeritus will
also enjoy a monthly honorarium approved by
the syndicate plus all monetary and nonmonetary
benefits enjoyed by active professors. He or she
also can choose to live in the Universitys resi-
dential houses. Prior to December 2011, three
retired professors have been awarded the post of
professor emeritus in the University.
2. Supernumerary professor: After retirement, a pro-
fessor may be reappointed as a supernumerary
professor for at best a 5-year contract, which can
be renewed, by the syndicate. The supernumerary
professor can remain active until he or she becomes
mentally or physically exhausted or health deterio-
rates. He or she is expected to be involved only
with teaching and/or doing research work.
The remuneration of a supernumerary teacher
will be fixed by the syndicate but it will not
exceed the highest scale of the basic pay enjoyed
by the supernumerary teacher at the eve of retire-
ment. Besides, all monetary and nonmonetary
benefits enjoyed by active faculty will be offered
to a supernumerary teacher. But he or she will not
be entitled to the residential houses provided by
the University. Among the five retired professors
who were granted this status prior to December
2011, two are still active.
3. Reappointment officer: Retired officers may be
reappointed by the decision of the syndicate up
to their age of 65. The types of work and their
remuneration will be determined by the syndi-
cate, but their monthly basic salary must not
exceed the amount earned prior to retirement.
All other monetary and nonmonetary benefits
will be given as similar to their peers in service.
Like supernumerary teachers, they also can con-
tribute to the provident fund but will not be con-
sidered for the University pension scheme and
the residential support. A count of the reap-
pointed officers in the different sections/offices
of the University since this status was estab-
lished (i.e., 1994-1995) is shown in Table 4.
18
Table 4 shows that a total of nine retired officers
have so far been reappointed by the syndicate
under the contractual reappointment schemes. Six
of them have completed their contract period and
three are still working.
Nonmonetary Benefits. In addition to the cash benefits, the
University provides some nonmonetary benefits.
Medical care. There is a medical center established on
campus with full-time doctors, nurses and staff for the
treatment of the employees and their family members who
reside on campus. In addition, two doctors are appointed
in town for the treatment of employees and their family
members who reside off-campus.
Subsidized transport. Both in-campus and off-campus
employees enjoy transportation for a minimum subscrip-
tion compared with present high transport cost.
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
Mazumder and Mazumder 47
Leave without pay. Unpaid leaves are known as leave
without pay. The University allows the following types
of unpaid leave:
1. Study leave (extraordinary): Leave permitted by
the University to complete degree requirements in
addition to the paid study leave is called the
extraordinary leave and is unpaid.
2. Leave under lien: An employee (faculty only) of
the University can enjoy leave without pay for a
maximum of 3 years for authorized purpose under
lien while maintaining his or her service with the
University. The University can extend this leave
period by 1 year as extraordinary leave if required.
Part 2: In-Depth Review of Postretirement
Benefits
Provident Fund. The management of the provident fund and
returns on invested monies are important for the sake of
promised employee benefits. At the time of final settle-
ment with employees, they would naturally expect to get
their contribution to the fund with interest in the final lump
sum payment. Many may also want to take advantage of
the provision allowing an advance or loan from the fund to
meet current expenses. To handle these transactions
smoothly, an adequate balance needs to be maintained at
all times. But a report of a committee of three that includes
two senior professors and the Comptroller of Accounts of
the University (the committee was created by a decision of
the finance committee in 2011) indicates that the fund is at
present in deficit of about TK300 million. Interviews with
representatives of the accounts section of the University
suggest the following reasons for the deficit.
Granting excess loans/advances. Advances may be
granted to a subscriber up to 80% of the amount standing
to the employees credit in the fund and no further grant
will be allowed unless the first advance is fully repaid.
Table 5 shows the position of granting advances to the
employees from 2006-2007 to 2010-2011.
The information in Table 5 shows that the average rate
of advance granted during 2006-2007 to 2010-2011 is
101.6% of the amounts subscribed, leaving the fund with
a constant negative balance. Almost entire subscriptions
have been issued as advance in the years 2006-2007,
2009-2010 and 2010-2011. But the picture is even worse
in the years 2007-2008 and 2008-2009, when the fund
experienced advances made at the rate of 111% and 136%
of subscriptions.
Increased number of application for advances. About
100 to 120 applications for advances have been received
monthly from 2006-2007 to 2010-2011, which is creating
continuous pressure on the fund. Very often the money
has to borrow temporarily from other funds, such as the
medical loan fund, development fund and others, in order
to honor the huge number of requests for advances.
Imprudent transfer of funds. Transferring funds to meet
other purposes is a common phenomenon. Nevertheless,
the monitoring system of this transferring is so poor that
that the accounts do not reflect this for indefinite periods
of time.
Difference in the investment returns and deposits to the
fund. Interest is allowed on the amount deposited by the
Table 4. Number of Contract Reappointments of Retired Officers.
Number of reappointed retired officers
Total Name of the sections Served before Currently serving
Registrars office 3 0 3
Accounts section 3 2 5
Press 0 1 1
Total 6 3 9
Source. Data have been collected from the concerned officials of the registrars office.
Table 5. Advance Granted as Percentage of Subscription.
Year
Amount of advance
granted, Bangladeshi
taka
Percentage of
advances granted
on subscription
2006-2007 17,465,000 91
2007-2008 21,229,000 111
2008-2009 26,096,000 136
2009-2010 23,906,000 71
2010-2011 33,350,000 99
Average 101.6
Source. Approximate figures, provided by officials of the accounts
section. Percentages calculated by the authors. Monthly average sub-
scription was TK1,600,000 before the revised salary scale 2009 and
TK2,800,000 after the revised scale.
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
48 Compensation & Benefits Review 45(1)
employees to the provident fund. The balances in the
fund are invested in financial institutions. In fact, there
is a sharp difference between the rate of interest credited
to the deposits in the fund and the investment returns.
Table 6 illustrates the interest rates from 2006-2007 to
2010-2011.
Table 6 shows that average rate of interest on invest-
ment varies from 8.5% in 2006-2007 to 10.5% in 2010-
2011, whereas the interest rate on employees contributions
to the fund remains the same at 12.5%. As a result, the
almost 3% annual difference in the rates contributes to a
growing deficit.
For the foregoing reason, the University authority
could not comply with the rules regarding the investment
of 60% of the balance in the provident fund due to the
following reasons
19
:
1. Increased number of applications for advances
from the fund
2. Increased number of advances granted
3. The unprecedented transfer of fund to serve other
activities and delays to the recovery of transferred
money
4. Unavoidable pressures for final settlement of
contributions to the provident fund, for which
borrowings from other funds are at times inevita-
bly needed and then a shortage of invested funds
becomes evident
In this context, it is worth mentioning that the rate of
investment in private sector financial institutions is sig-
nificantly higher than that in public sectors. The difference
between interest paid and interest received can be reduced
by investing the fund as much as possible in private sector
financial institutions. But limitations imposed by the
Government do not allow the University to invest more
than 25% of the fund with private sector institutions.
Pension Benefits. Pension benefits paid to retired employ-
ees of the University are fully funded by the Government.
An estimate of the number of employees expected to
retire and their estimated pension benefit is sent to the
Government through the University Grants Commission
(UGC) a year before the actual allocation. The number of
actual retirements sometimes increases due to early
retirement or sudden death. In fact, for each retirement,
large amounts of money are involved so an underestimate
of the number of retirements has significant consequences
for the fund. Deficits must be covered by borrowing from
other University sources. As a consequence, the Univer-
sity has to struggle to make up the deficits. The funds
sought and actually received and the percentage of short-
age from 2006-2007 to 2010-2011 is shown in Table 7.
Table 7 shows that pension amount received every
year from 2006-2007 to 2010-2011 is less than the amount
demanded. The deficits of course are additive, making
the situation worse each year. The average shortage
stands at about 10% (averaging each years percentage of
shortage) for which the University had to borrow from
other funds to meet the pension demanded until the recov-
ery of the shortage from the Government.
Viewpoints of Retired Employees. At the end of a long career,
employees must plan not only for their own future but also
for their family members based on their expected retire-
ment income. But at retirement, the employees of the Uni-
versity suffer from considerable delay and difficulty in
receiving payment of their full retirement benefits as a
single lump sum payment. The major reason is the regular
shortage of funds in the provident fund account.
Several additional issues have come to light after
interviewing a sample of 40 retired employees (including
10 professors, 10 officers and 20 third- and fourth-class
employees). A 4-point scale was used to record their
responses to the questions in the interviews.
Table 6. Difference Between the Rate of Interest on Deposited Funds and on Invested Funds.
Average investment returns credited by financial
institutions, %
Interest rate credited
to fund deposits, % Difference, % Year
Public financial
institutions
Private financial
institution Average
2006-2007 8 9 8.5 12.5 4
2007-2008 9 10 9.5 12.5 3
2008-2009 8 11 9.5 12.5 3
2009-2010 8 11 9.5 12.5 3
2010-2011 9 12 10.5 12.5 2
Source. Annual average interest rates earned on investments from public and private financial institutions, according to representatives of the
accounts section.
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
Mazumder and Mazumder 49
Tables 8 and 9 show the experience of the interview-
ees with the payment of retirement benefits along with
the behavioral pattern of the officials at the time of pay-
ment processing.
Table 8 confirms that the employees interviewed are
highly satisfied with the nonmonetary benefits. But their
experience with retirement benefits is not as positive. A
lot of time is spent in processing the application form. In
fact, 80% of the faculty said that more than 6 months
were taken to process the application, whereas only 20%
said the time taken was 2 to 4 months. The officers seem
to have been afforded a bit more preference; 60% of them
said the application processing time was more than 6
months whereas 40% said it was 2 to 4 months. All third-
and fourth-class employees experienced less preference,
stating that their application processing time was more
than 6 months.
After completion of the application processing, the
employees interviewed had to wait for an additional
month after 6 months to receive the first payment of their
retirement benefits. The time waited to receive benefits
from earn leave, group insurance premium, medical loan
fund and provident fund (in full) was 1 to 2 months. All
third- and fourth-class employees in the group received
earn leave, group insurance premium, medical loan fund
and provident fund benefits fully in a single payment.
Though all the individuals received the earn leave, group
insurance premium and medical loan fund benefits fully,
80% of them said that they got provident fund benefits in
a single payment whereas 20% said they received two
installments. Payments from the benevolent fund took an
additional 2 to 4 months for everyone interviewed.
Almost all the interviewed employees had to wait
for the full payment of the pension benefit. Only 20%
of the faculty and officers reported receiving the pay-
ment within 1 to 2 months; the other 80% of the faculty
and officers and 100% of the third- and fourth-class
employees had to wait more than 6 months. Apart from
20% of the officers, all other employees did not receive
pension benefit fully at a time40% of them received
it in two installments and 60% in more than two
installments.
In the interviews, the employees involved in applying
for benefits were asked to assess the behavior and atti-
tudes of the employees in the accounts section who han-
dled their applications. Table 9 shows their responses to
the questions.
Table 9 shows how employees applying for benefits
perceived the behavior of the accounts section personnel
in processing these transactions. As to their cooperation
in expediting payments, it is seen that 40% of the profes-
sors and 20% of the officers strongly agreed; 40% of the
faculty, officers and third- and fourth-class employees
agreed and 20% of the professors and 40% of the officers
and third- and fourth-class employees disagreed with the
statement on the role of the Comptroller of Accounts
while seeking his part in expediting the payment. In all,
20% of the teachers, officers and third- and fourth-class
employees strongly agreed; 40% of the teachers and offi-
cers and 80% of the third- and fourth-class employees
agreed and 40% of the teachers and officers disagreed
with the statement on the role of the concerned officers
and staffs while processing and moving the file and issu-
ing check for payment. Only 20% of the teachers and
officers strongly agreed, 80% of the teachers, 60% of the
officers and 20% of the third- and fourth-class employ-
ees agreed and 20% of the officers and 80% of the third-
and fourth-class employees disagreed with the statement
on the behavior of the concerned officials while request-
ing them during the whole period of the payment pro-
cess. It is, therefore, observed from Table 9 that the
behavior and attitudes of the concerned officials are not
perceived to be good or cooperative. Although nearly the
same responses were made by the teachers and officers
on the behavioral pattern of the concerned officials,
including the Comptroller of Accounts, as much as 80%
of the sample third- and fourth-class employees showed
their dissatisfaction.
Table 7. The Amount Demanded From the University Grants Commission and Actually Received Annually as Pension and the
Percentage of Shortage.
Annual pension funding, Bangladeshi taka
Shortfall as a percentage Year Funds requested (budget) Funds received (revised budget)
2006-2007 80,000,000 70,000,000 12.5
2007-2008 95,000,000 80,000,000 15.8
2008-2009 117,600,000 112,368,000 4.4
2009-2010 139,400,000 129,013,000 7.5
2010-2011 168,000,000 155,000,000 7.7
Average 10.0
Source. Rounded figures, provided by the accounts section.
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
50 Compensation & Benefits Review 45(1)
Table 8. Experience of Retired Employees With Payment of Benefits.
Faculty Officers
Third- and fourth-class
employees
Number % Number % Number %
Cash retirement benefits
1. Time (months) taken to receipt of payment of retirement benefits after submission of application:
<1
1-2
2-4 2 20 4 40
4-6
>6 8 80 6 60 20 100
2. Time (months) taken after completion of application to start payment from
i. Leave balance, refund of group
insurance premium and subscription
to medical loan fund

<1 10 100 10 100 20 100
1-2
2-4
4-6
>6
ii. Benevolent fund
<1
1-2
2-4 10 100 10 100 20 100
4-6
>6
iii. Provident fund
<1
1-2 10 100 10 100 20 100
2-4
4-6
>6
iv. Pension
<1
1-2 2 20 2 20 20 100
2-4
4-6
>6 8 80 8 80
3. Settlement of provident fund is made
i. Fully at a time 8 80 8 80 20 100
ii. Partly in two or more installments 2 20 2 20
4. Payment of pension is made
i. Fully at a time 2 20
ii. Partly in two installments 4 40 4 40 8 40
iii. Partly in more than two
installments
6 60 4 40 12 60
5. Cash payments from benevolent fund, group insurance premium, and medical loan fund is made
i. Fully at a time 10 100 10 100 20 100
ii. Partly in two or more installments
Nonmonetary benefits
6. Nonmonetary benefits are provided as
communicated
10 100 10 100 20 100
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
Mazumder and Mazumder 51
Against the backdrop of general dissatisfaction shared
by the retired employees, an attempt was also made to
obtain the opinions of accounts section personnel. Toward
this end, the following matters have come to light:
1. Reasons for delays in making payment are (a) the
shortage of money in the provident fund and
reduced grants for pensions from the Government
than the amounts requested and (b) the increasing
number of applications for retirement benefits.
2. Due to the timing of salary continuation and the
official date of retirement (i.e., payment of salary
is continued from the date of retirement till next
July 1), and since processing for pension benefits
starts on July 1, the Governments practice of pay-
ing the pension grant in four installments fre-
quently makes it impossible to pay the pension
benefit as a single payment.
3. Nobody contacted in the accounts section agreed
with the claims. They stated that if such incidents
had occurred, they had no knowledge of it.
Suggested Steps to Improve the
Management of Benefits
In the context of the difficulties observed in processing
postretirement benefits, the authors provide several sugges-
tions to alleviate the problems related to the pension bene-
fits, the provident fund, house rent allowances and the
behavioral issues of the officials. The goal is to improve the
management of the benefit payment processes.
Suggestions Related to Pension Benefits
1. Since the amount granted by the Government
through the UGC for pension benefits is always
less than the amount sought, the University
authority can urge to the Government and the
UGC to increase the grant to the required level. In
this case, the authority can show the Government
the real picture of deficit of pension grant and
explain the consequences of this deficit, which
the authority has been facing every year.
2. If the authority fails to convince the Government
by taking the step suggested in (1) above, it can
change the tradition of raising pension demand in
its budget. The amount of current year pension
demanded can be increased by the rate of last year
or the average rate of the past 5 years deficit,
whichever is higher, in addition to the revised
budget for the past year pension deficit.
In the next year, the amount of the deficit either
will be reduced or completely eliminated.
Moreover, if any surplus arises due to an excess
pension grant, a separate fund named pension
fund can be formed and this fund will be uti-
lized in future only for the pension purpose.
Obviously, the formation of this fund will have
to be ratified by the Government, and the trans-
parency as well as the accountability of this
fund management must be ensured. By the per-
mission of the Government, the fund also can be
invested in the profitable securities with a view
to serving its purposes in a better manner.
3. Since Governments policy of disbursing the
annual pension grant in four installments is one of
the most important reasons for the inability to pay
the pension benefit fully as a single payment, the
University authority can request the UGC to dis-
burse the entire pension yearly at a time. Otherwise,
the University officials can think of forming the
pension fund as suggested in (2) above, which
will help the authority meet pensioner demands
with minimal delay in the future.
Table 9. Retired Employees Assessment of the Behavior of Accounts Section Staff.
Faculty, n (%) Officers, n (%) Third- and fourth-class employees, n (%)
Questions
Strongly
agree Agree Disagree
No
comments
Strongly
agree Agree Disagree
No
comments
Strongly
agree Agree Disagree
No
comments
1. The office of the Comptroller
of Accounts was cooperative
and sympathetic in efforts to
expedite payment.
4 (40) 4 (40) 2 (20) 2 (20) 4 (40) 4 (40) 8 (40) 12 (60)
2. The officers and staff were
sincere and cooperative while
processing the file and issuing
check for payment.
2 (20) 4 (40) 4 (40) 2 (20) 4 (40) 4 (40) 4 (20) 16 (80)
3. Behavior of the concerned
officials was praiseworthy.
2 (20) 8 (80) 2 (20) 6 (60) 2 (20) 4 (20) 16 (80)
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
52 Compensation & Benefits Review 45(1)
Suggestions Relating to Provident Fund
1. In order to reduce the deficit in provident fund, an
up-to-date statement of the deficit amount with an
explanation of the reasons for this deficit should
be prepared and forwarded through the UGC to
the Ministry of Finance of the Government. The
statement should be sent by a committee of high-
est officials of the University with a specific
request to reimburse the deficit and avoid it in the
future. Thereafter, the Government needs to be
convinced that the deficit is creating personal
problems for employees and that there are genu-
ine reasons to address the situation.
2. Generally the private sector financial institutions
offer higher rates of return than the public sector.
So, if the maximum amount of the provident fund
can be invested in private sector accounts, the
shortage in interest and the deficit will be reduced.
But due to the Government provision relating to
compulsory investment of at least 75% of the
provident fund in public sector financial institu-
tions, the shortage is a common phenomenon. So
a plea should be raised to the Government through
the UGC to either eliminate the mandated invest-
ment of the provident fund or provide the short-
age in interest payable as a subsidy.
3. The 60% investment of the provident Fund (as
prescribed by the General Provident Fund Rule
1997) must be ensured by following strictly the
formula given below:
Investment principal = Employees monthly
contribution to the provident fund + Recovery of
loan given earlier Amount of loan disbursed.
Nevertheless, if the 60% investment is not possi-
ble, it has to be decided in meetings of the syndi-
cate how the final settlement of the provident
fund will be resolved at the end of an employees
service.
4. It must be ensured that any loan taken from the
provident fund for other purposes of the University
be repaid as soon as possible with interest at the
rate prevailing in the market.
5. Interest can be charged on an advance given to
the employees. Here interest will be calculated at
the prevailing rate and to be included in the prin-
cipal when he or she makes repayment by
installments.
6. The University also can take some initiatives to
reduce the deficit in the provident fund by
transferring a part of its income earned from dif-
ferent sources listed below to the provident fund:
i. 20% of the income earned by selling the
admission form of the first-year honors every
year
ii. 10% of the income received from other
sources like rent of premises, selling trees
from the campus, toll realized from University
gate and so on
Suggestions Relating to the House Rent
Allowance
Those who are enjoying the residence facilities plus
house rent allowances (subject to the deduction of 7.5%
of their basic pay plus rent per square foot of spaces)
where they reside may be required to pay back the cash
allowances at the end of their service. That is why the
University authority should negotiate this matter with the
Government through the UGC, explaining the reasons
convincingly, so that the employees will not have an
unexpected reduction in the benefits at the time of leaving
or retiring.
Suggestions Relating to the Behavior of the
Individuals Processing Benefit Applications
1. It should not be forgotten that the employees who
have just retired today were our colleagues yester-
day and long-service employees have worked
together for decades. Besides, we should remem-
ber the very important and probably the most
effective proverb: As you sow, so shall you
reap. So it is not professional to misbehave at
any point in rendering services to retired employ-
ees. Rather, the present concerned officials should
make the utmost effort to cooperate with those
who are no more in service. University officials
should initiate an investigation of the described
behavior. The necessary corrective measures,
possibly including customer sensitivity train-
ing, can be introduced to correct the situation.
2. The applications for retirement benefits should be
processed within the shortest possible time without
showing discriminating attitudes in terms of politi-
cal, social, personal or any other reasons. Above
all, a uniform practice for making the payment of
retirement benefits should be introduced. The
advance/loan requests should be issued to active
employees from the loanable funds maintained
with the University without any discrimination.
by guest on June 10, 2014 cbr.sagepub.com Downloaded from
Mazumder and Mazumder 53
Conclusion
To ensure continued academic excellence, the University
of Chittagong has no other alternative but to provide
attractive total compensation in line with competitive
practices in the country, and a pleasant working envi-
ronment. The University leaders follow the rules and
regulations regarding employee benefits enacted by the
Government. The Government is the main source of
these benefits. Nevertheless, the authority can ensure the
proper management of funds, efficient management, and
when appropriate, they can modify the system used to
manage applications for retirement benefits, specially the
pension and the provident fund, in order to minimize the
risk of developing any discontent in the employees in get-
ting the benefits.
Acknowledgment
The authors would like to thank Professor Dr. Monjur Morshed
Mahmud and Professor K. M. Golam Muhiuddin of the
Department of Accounting and Information Systems, University
of Chittagong, Bangladesh, for their valuable suggestions, and
Mr. Howard Risher, Editor of Compensation & Benefits Review,
for his generous editing and well-judged comments on this
article.
Declaration of Conflicting Interests
The author(s) declared no potential conflicts of interest with
respect to the research, authorship, and/or publication of this
article.
Funding
The author(s) received no financial support for the research,
authorship, and/or publication of this article.
Notes
1. McNamara, C. (n.d.). Employee benefits. Retrieved from
http://managementhelp.org/pay_ben/benefits/benefits.htm
2. Beam, B. T., & McFadden, J. J. (2001). Employee benefits
(6th ed.). Chicago, IL: Dearborn Real Estate Education.
3. The Institute of Chartered Accountants of Bangladesh. (2004).
Bangladesh Accounting Standards (BAS), p. 2. Retrieved from
http://www.icab.org.bd/index.php?option=com_content
&view=article&id=82&Itemid=116
4. Registrar of the University of Chittagong. (2011).
Chittagong University diary (p. 15).
5. Government of Bangladesh. (2009). National Salary Scale
2009. Retrieved fromhttp://www.bankersbd.com/national-
pay-scale-2009.html
6. University of Chittagong. (2010). Decision No. 36 of the
463rd Syndicate Meeting held on 17.01.2010.
7. University of Chittagong. (2007). Decision No. 9 of the
439th Syndicate Meeting held on 03.03.2007.
8. University of Chittagong. (2009). Decision No. 18 of the
459th Syndicate Meeting held on 31.05.2009.
9. University of Chittagong. (1993). Decision No. 6 of the
275th Syndicate Meeting held on 25.09.1993.
10. University of Chittagong. (1984). The Chittagong
University employees hospital facilities rules 1984.
11. Registrar of the University of Chittagong. (2003, June).
Chittagong University calendar.
12. University of Chittagong. (1997). The Chittagong
University General Provident Fund Rules 1997.
13. Registrar of the University of Chittagong (2003, p. 60).
14. Government of Bangladesh, Ministry of Finance, Finance
Department. (1989). Ref. No. Ama (bidhi-1)-3 P 28/85/106,
November 4, 1989, quoted in Registrar of the University of
Chittagong (2003).
15. Government of Bangladesh. (1987). Order No. Ama (Abi)
Regulation-2/Leave-2/87/79, September 13, 1987, quoted
in Registrar of the University of Chittagong (2003).
16. Registrar of the University of Chittagong (2003, p. 74).
17. Data have been collected by the authors from the concerned
officials of the accounts section, University of Chittagong.
18. Data have been collected by the authors from the concerned
officials of the registrars office, University of Chittagong.
19. University of Chittagong (1997).
Author Biographies
Bidhan Chandra Mazumder is an assistant professor of
Accounting and Information Systems, University of Chittagong,
Bangladesh. He has been a member of the faculty since 2000.
He has an MBA and a BBA in accounting. He has authored or
jointly authored a number of professional articles. By the time
this article is published, he anticipates a promotion to associate
professor.
Mita Mazumder is a lecturer in the Faculty of Business
Administration, BGC Trust University, Bangladesh. She has
earned a BSS and an MSS in economics and is completing
requirements for an MPhil degree.
by guest on June 10, 2014 cbr.sagepub.com Downloaded from