News
President halts changes to pension gratuity system
View(s):President Mahinda Rajapaksa, now on a visit to Bolivia, last night instructed Treasury Secretary P.B. Jayasundera not to change the existing system of pension gratuity payments to retiring public sector employees.
A Presidential spokesperson said the President gave the instruction via a telephone call he made from Bolivia where he is attending the G-77 summit.
Under the existing system, retiring public sector employees are paid 24 months of their gross salary as a lump sum through the ministry, department or the institution they had served in. Fifty six per cent of the amount is subsequently deducted monthly from their pension.
The Treasury, in a bid to divert more public funds for development work, has recommended that the gratuity should be paid through a state bank as a loan, but the recommendation drew a storm of protests from public sector trade unions and opposition political parties. Trade unionists said if the bank loan system was introduced, pensioners would have to pay back the entire amount – not 56 per cent of the gratuity sum as happens under the present system.
They also expressed fears that if the new system was implemented, the banks could change the criteria to grant gratuity loans and as a result the pensioners could lose the benefit. Gratuity payments to some 15,000 public sector retirees have been held back, pending the implementation of the new system.Pensions Department Director General S.S. Hettiarachchi earlier defended the proposed scheme saying it would be a more efficient system as the beneficiaries could receive their funds expeditiously.
The Government allocates more than Rs. 140 billion a year for the pension payments of some 535,000 retired public sector workers.