05/17/2011, 00.00
SRI LANKA

Sri Lanka: pension guaranteed "until funds run out"

Melani Manel Perera
New pension scheme set for approval, breaking down the existing fund contributions into three deposits: for employees, migrant workers and the self-employed. In case of death of the worker, only partial survivor's pension for family members.

Colombo (AsiaNews) - The government of Sri Lanka is about to approve a new draft law on pensions, allocating the contributory pension fund into three separate deposits and guaranteeing a worker’s pension "as long as funds last." In reality, for 10 years, every employee will deposit a fixed percentage of their wages to a membership fund, which will form their pension , but once the money "set aside" finishes the person is no longer entitled to any pension. Trade unions and Caritas Sri Lanka-Sedec criticize the draft and fear that the government only aims to “steal money from the people. " Colombo defends the changes, calling them "required" to ensure the welfare of the people who reach retirement age. " If approved, the new pension scheme will be in force as early as this month.

The bill provides for three new funds: one for employees, one for migrant workers and one for the self-employed. The employee will contribute 2% of their gross monthly salary for a minimum period of 10 years, in order to have access to a pension at the age of 60. Every worker must pay a minimum amount of 12 thousand rupees [about 77 euro] per year. Contributions may be made in one or more instalments, within their 55th birthday. At that point, the benefit will be available when they reach 65.

However Prathiba Mahanamahewa, doctor and lawyer, calls the bill "unfair and misleading." According to the plan, once the 10 years are over the employee is eligible to become a member of the fund to which he belongs. The contributions and interest thereon accrued during the 10 years, make up the individual account for each person. "But once they retire, and the money spent from the individual account is finished - says the doctor - the person ceases to be a member of the fund, in short, they are no longer entitled to a pension. This is unacceptable, because everyone should be able to enjoy life after their  retirement. " Mahanamahewa attended the meeting organized by Caritas Sri Lanka-Sedek, last May 13.

And the pension scheme changes do not end there. Under the new draft, if the worker dies, his wife and children are entitled to only 60% of the pension accumulated. The remaining 40% falls into state coffers. Much the same in case of interruption of employment for health reasons such as "permanent" disability with medical certificate, the employee can use only 60% of the pension accumulated.

When questioned on this issue, Fr. Reid Shelton Fernando said: "Civil society and the clergy should monitor the implementation of this law. The Board of Directors must be transparent and accountable, and act taking into account the fears of workers and their families. "

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