Rs. 3 bn from treasury for pension fund
A Treasury allocation of Rs. 3 billion and a contribution of 2% each of the consolidated monthly salary from the employee and the employer would raise the three pension funds proposed to be established to pay pensions to private and non-formal sector employees, Labour Relations Minister Gamini Lokuge said yesterday.
Accordingly, three separate funds – The Employees’ Pensions Benefit Fund, The Expatriate Employees’ Pensions Fund and The Self Employees Pensions Fund are to be established to cover the three categories of employees for pension benefits. It was also decided at the discussion to present the private and semi government pensions Bill as early as possible after further consultation with the Labour Minister and the Attorney General.
Those engaged in self-employment and expatriate Sri Lankans would have to obtain a membership of their respective pension funds and make a monthly contribution to be eligible for the pension benefits, he said.
“The Treasury will set aside Rs. 1 billion each for the three proposed funds for private sector employees, Sri Lankan expatriates and self-employees as a start-up investment. The new formula is no different to the Women & Orphans Pensions (W&OP) scheme currently in operation for public servants. President Mahinda Rajapaksa has instructed to go ahead with the programme as quickly as possible and no funds from the EPF, ETF or gratuities will be utilized to raise pension funds for the private and informal sector,” Minister Lokuge told Daily Mirror.
Minister Lokuge added that the draft of the new formula would be presented to the Parliamentary Consultative Committee on labour relations this week. The Ministry expects to discuss the pension scheme for the private and non-formal sector with all stake holders including the employees, employers and trade unions before it is presented in Parliament as a Bill shortly.
President Rajapaksa on Monday allayed fears on moves to establish a pension fund for the private sector utilizing EPF and ETF benefits and gratuities of the private sector and semi government employees. He instructed them to set up three separate funds instead following discussions held at the Temple Trees with Trade Union representatives and employers on the controversial Private Pensions scheme proposed by the Labour Ministry.
A novel pension-Cabraal
The Central Bank is to introduce a novel pension scheme for the benefit of eight million employees in the private sector and farmers, fishermen and those engaged in self-employment, Central Bank Governor Ajith Nivard Cabraal said yesterday. The new pension scheme for the private sector employees will be established initially with the state banks. The Bank of Ceylon, The Peoples Bank and the National Savings Bank will facilitate private sector employees to open a ‘Retirement Fund / Account’ under each employees name enabling the employee to contribute to the fund when he or she desires. Contributions can be made from any part of the country at any time.
It could be a small amount like a few hundred rupees or several lakhs. The holder of the retirement account would be issued an ATM (Automated Teller Machine) card by the bank for him to deposit money in his or her account, Mr. Cabraal said..
The main feature of this scheme was that the customer couldn’t withdraw money from the account as it was for a special purpose. When the account holder reaches 55 years he or she can make a request to the bank to start paying the pension based on the accumulated fund including the interest.
The customer was free to continue to contribute to his or her personal retirement fund even after the 55 years of age to obtain a bigger pension. However, the bank would start payments right after the customer made a formal request to do so, he said.
“The objective of this novel product is to secure the future of employees other than those in the public sector who draw a pension after retirement. There was a public outcry for a long time to come up with a plan to financially strengthen private sector employees, farmers, fishermen and those engaged in the building construction sector and self-employment, Mr. Cabraal said.
The new product has been tested at the BoC, People’s Bank and the NSB and has been highly successful. The three state banks would introduce this product island wide shortly with the main focus on the rural and fisheries sector, Mr. Cabraal stressed.
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