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| Sunday, 8 September 2002 |
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Better deal for employees on retirement: Revision of pension scheme, PF and ETF benefits CHAMIKARA WEERASINGHE Since the government has extended the retirement age from 55 to 60 years, it will now look into the feasibility of revising the existing public sector pension scheme, EPF and ETF, for the benefit of the public and private sector employees on retirement. The Sri Lanka Association of Investment Professionals (SLAIP) will make representations in this connection with the assistance of the International Labour Organisation (ILO). "Pension reforms are given priority by the UNF government, which had been elected to power not only to restore peace to the country but to ensure the economic growth of the nation and the workers as well. Ravi Abeysuriya, an SLAIP member, told the "Sunday Observer" that moves are under way to improve the quality of life of the people, and necessary reforms in that connection were being prepared. Revision of pension reforms and EPF and ETF has been going on for more than ten years without any constructive steps being taken by successive governments to implement it, until rapid demographic changes had necessitated such a move for an 'ageing population'. According to the demographic profile in Sri Lanka, every 100 persons of the working population will have to support 52.6 dependents and, of them 17.2 would be over-aged - 60 years and above- by 2006. This would increase to more than 100 dependents in about a decade, according to estimates of the World Bank, IMF and ILO. "As a result, the government will be unable to cut down taxes on the working population since it has to sustain those in retirement," Labour Minister Mahinda Samarasinghe said. Minister Samarasinghe was speaking at a workshop on "Security on Retirement, Risks and Challenges" organised by the SLAIP at the Colombo Hilton, last week. The workshop was sponsored by the ILO. "With the spiralling cost of living, it is inconceivable that the workers would be in a position to further support their parents on their retirement ," the minister said. "Ten per cent of the government's recurrent expenditure is utilised for pensions, but this is bound to increase in the future as the working population ages," he said. "Some studies have revealed that unfunded liability of the Public Sector Pension Scheme(PSPS) to be a staggering Rs. 580 billion (B), which is equivalent to 43 per cent of the GDP. This implies that it has to be added to our existing national debt, which is 103 per cent of the GDP," the minister added. He also stressed the importance of ensuring teachers of a generous pension on retirement as a necessary incentive under the reforms. Reflecting on the EPF, he said that there were over 1.9 million members and assets of approximately Rs 260 billion (B) with 98 per cent of them in government securities. "Successive governments have used them for deficit financing of most recurrent expenditure, which has resulted in extremely poor returns to recipients. Upon retirement, a lump sum due to them from the EPF can only sustain 25 per cent of their final salary on retirement," he said. "Returns of the ETF has been poorer than the EPF," he said. Meanwhile, the SLAIP complains that the workers are unduly disregarded when their funds are being used by the governments. "The workers have a right to know what is happening to their money - whether it is being used for development activities or whether they could derive their benefits in the long run." "Should the government use public funds for its own benefits, such as buying cars, handbags and other luxuries, as the case may be, it will worsen matters," said SLAIP members. They also said that the workers may be entitled to withdraw money from their security funds to invest for their future sustenance after retirement. "Since there is a risk of losing the money in unsuccessful ventures, arrangements should be made to allocate only a desirable percentage from their own funds," SLAIP members said. |
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