Rs. 196 b for pensioners: Harsha

By Shehana Dain

Prior to the widely-anticipated Budget presentation next month, a top official yesterday said the Government has proposed spending Rs. 196 billion for pensioners next year.

This is a significant increase in comparison to the allocation of Rs. 127 b made in the previous Budget, insisted Foreign Affairs Deputy Minister Dr. Harsha de Silva at a symposium organised by Department of Pensions. 

Dialog Axiata Plc also rolled out a secure and convenient facility to directly transfer pension funds via the eZ Cash mobile wallet at the symposium.

The launch comes following Dialog’s foreign remittance facility by means of the eZ Cash platform which was launched in July this year.

This facility will allow pensioners to receive their pension funds with utmost ease. It also enables users for utility payments institutional payments and domestic money transfer facilities

In that Context the Board of Pensions (BoP) yesterday launched a web radio namely ‘Wishrama Radio’ and a monthly e-magazine to play the role of a catalyst to distribute information and platform to be of assistance for pensioners.

“The burden on the Treasury will continue to mount when fewer people working will have to support the generation who are not working,” he highlighted.

In his remarks, he cautioned the authorities to stop ignoring the global demographic crisis. It has been estimated that by 2030 individuals over the age of 60 will amount to 20% of the population and will keep on escalating.

“Many have brought this problem to the notice of successive governments, but due to other important matters this has been continually ignored. What really concerns me is that politicians like us have not understood the gravity of the impending crisis of old age care.” Dr. De Silva added.

He further noted that the matter gets more complex due to the insufficient labour force participation in the country.

Sri Lanka has an estimated 8.8 m labour force and 8.4 m of it is actively involved. From the work force 65% comprises male labour force participation and 35% are female workers.

“There’s a huge disparity when it comes to labour force participation in the country as the male representation amounts to 5.5 m and female workers are just 2.9 m from the working population.”

“The problem here is many females don’t work and they have an average lifespan of eight years more than their male counterparts. So if they don’t work, how will they receive social security or pension?” he asked.

Dr. De Silva opined that while job creation was a primary motive of the Government, authorities should create more jobs for women to lessen the alarming gap to avoid a social crisis in the future.

To create a national pension policy he suggested that the relevant authorities should increase the retirement age to ensure sustainability. “I think the retirement age should increase from 55 to 60, but now almost everyone is 60 so it’s a better option if the retirement age is increased from 55 to 65 during the next five years.”

Another section he stressed was the declining net inflows of the pension scheme. “In 2013 the inflows were Rs. 80 b and outflows were Rs. 50 b, which resulted in a net inflow of Rs. 30 b. Moreover in 2014 inflows were Rs. 90 b and outflows increased by Rs. 65 b; net inflows decreased to Rs. 25 m. If this trend keeps on growing it’s going to cause adversity,” he highlighted.

According to Dr. De Silva 3.9 workers amounting to 44% of the labour force in the country have some form of coverage and access to pensions of provident funds while 55% of the workforce who are occupied in various informal channels have absolutely no coverage. Furthermore, due to inadequacy of resources the population out of the labour force boundary also does not fall under the social security umbrella.

“Only about the 13% of the whole population is covered, so 87% of the country is not covered by any of the social security schemes,” he stressed.