Abhimana pension scheme - a timely product’

By Gamini Warushamana

The Abhimana pension scheme of the Bank of Ceylon (BoC) is a timely product to match the changes in the economy, living standards of the people and suit demographic changes, said Central Bank Governor Ajith Nivard Cabraal.

He was the chief guest at the launch of Abhimana at the BoC headquarters in Colombo last week. Cabraal said that the economy has undergone a massive change during the past decade.

“If you look back and compare you could see that today we are living in a new country.

Physical development and changes in macroeconomic fundamentals are witnesses to this change.

The way we live and do businesses has also changed,” he said.

He said that for over 30 years, inflation was above 12 percent and doing business was extremely difficult because there were regular clamours for wage increases.

Interest rates were high and in some instances it was as high as 25-30 percent.

The Rupee depreciated 7-10 percent per year. Today, the situation has totally changed and the economy is in a secure position. Inflation has been at mid single digit continuously for over 65 months, interest rates have dropped and the exchange rate is stable and as a result risk has come down.

However, we have to face various challenges in the new economy, Cabraal said.

With low interest rates, savers face challenges.

Those who deposit their EPF money in fixed deposits and depend on interest income, now get a lesser income.

So we have to address issues of this kind as well and secure investment opportunities must emerge from the financial sector.

Financial products such as the Abhimana pension scheme of the BoC and investment funds and unit trust funds are needed to address the issues.

In the new economy, there are many opportunities and financial institutions should come up with suitable products, he said. “We will face the problem of an aging population by 2040 and products of this nature will certainly help Sri Lanka to smoothly adjust to the new challenges.

We have a target of achieving a per capita income of $7,000 by 2020 and the status of a developed country by 2040.

"These are ambitious targets and not dreams,” Cabraal said.