Sri Lanka is making fresh attempts to prevent private sector workers from withdrawing their retirement contributions once they reach 55 years of age, a media report said.
The Sunday Times newspaper quoting an un-named official source said the Finance Ministry is drafting legislation to change the governing acts of the Employee’s Provident Fund and Employees Trust Fund to make them into a ‘pension’ or annuity.
At the moment the balance in the ETF made up of a 3 percent contribution from the salary can be withdrawn when a worker changes the job. The full balance of the EPF made up of 20 percent contribution can be withdrawn at the age of 55 as a lump sum.
With private sector workers rapidly ageing, inflows to the fund could become net outflows as early as a decade from now, the report said. At the time the state will lose a key source of ‘captive’ funding to cover its deficit budgets. Up to now the state has only targeted the retirement funds of private sector workers.
Unlike in countries like Singapore where all citizens are part of the EPF in Sri Lanka only private sector workers contribute to the fund. State workers are given pensions from taxes charged on the people.
The Sunday Times quoted Free Trade Zones & General Services Employees’ Union (FTZ&GSEU) convener Anton Marcus as saying that they wanted billions of rupees of unclaimed EPF money to be used for a private sector pension fund.
Marcus also called for independent management of the EPF, which is now under full state control.
The newspaper quoted an un-named official as saying that workers will be given the option of withdrawing the balance or keeping part of it as a pension.
Consultations with trade unions and employees were also promised.
An earlier attempt to deduct more money from private sector workers to build a ‘pension’ met stiff opposition and was abandoned after Roshan Chanaka, a protesting worker was killed by the state in a police shooting.
Economic analysts say the state should trim the public sector workforce, stop giving jobs to unemployable graduates and which will help reduce budget deficits.
Sri Lanka’s finance ministry has been attempting to rationalize some current expenditure in the last budget, but faces an uphill battle from spendthrift political parties.
Earlier attempts to trim the state workers and build a state worker pension fund was opposed by the Janatha Vimukthi Peramuna, a political party. from lbo.lk