Private sector employees are to be given pension rights under a new move by the government to amend the Employment Provident Fund Act.
The EPF and Employees’ Trust Fund (ETF) are to be transformed into a part-pension fund functioning under the Treasury, official sources said adding that the Finance Ministry has been directed to work out modalities of the pension scheme.
The proposed pension fund would allow a retiring member to take part of the money as a ‘lump-sum’ payment and retain the balance to receive a monthly pension or withdraw his or her entire contribution on retirement.
Confirming the government’s move to introduce the new scheme, Labour Minister Nimal Siripala de Silva said that a formidable pension and social security scheme is to be introduced for the private sector.
In a statement, he noted that an adequate social security programme has hitherto not been designed for the labour force of the private sector and this new move will bring retirement benefits for private sector workers.
The move to set up a private sector pension scheme comes as Sri Lanka is likely to face a major economic burden with an ageing workforce, a senior official of the Labour Ministry said adding that it was essential to bring improvements to the operating structure of both the EPF and ETF.
The new amendments to the EPF Act will provide provisions to set up a pension fund under the Treasury as the EPF or ETF in its current form cannot be considered a pension scheme.
Therefore, if both funds are going to be merged to provide a pension for life, the fund needs major reform and must be taken out from the Central Bank, he said.
The Government had abandoned its previous attempt in May 2011 to set up a separate pension scheme for the private sector with part of the EPF funds after wide-ranging public protests. Joint Secretary of Free Trade Zones and General Services Employees’ Anton Marcus told the Business Times any pension scheme for private sector should be made optional for workers obtain early retirement according to their wish without blocking it until they reach 60 years of age.
He said that the trade unions have not been informed of any proposed pension scheme and it should be introduced in consultation with trade unions.
This proposal should not be another attempt to use private sector employee’s life savings by the state to borrow funds at lower rates to bridge the deficit or any other purposes, he added.
He said that this matter will be brought to the notice of the next Labour Advisory Council meeting which is the tripartite apex body to discuss policy-related labour matters and advice the Minister of Labour.
However council meetings have not been convened during the past couple of months, he said adding that the Labour Ministry should conduct a meeting soon to discuss this matter.