EPF Act amendment to extend the retirement age brings hidden issues into the limelight
The government’s proposal to amend the Employees’ Provident Fund (EPF) Act to extend the retirement age of private sector employees both men and women up to 60 years has brought several crucial issues into the limelight.
Finance Minister and Prime Minister Mahinda Rajapaska in his 2021 budget speech said the retirement age of private sector employees would be raised to 60 years based on the life expectancy which is 72 years for men and 77 years for women.
But it was not clear as to whether the private sector employees are allowed to withdraw their EPF money after the previous retirement age of 55 years if they opt for early retirement.
Although it is good proposal for the private sector workers, it should be made optional for them obtaining early retirement according to their wish without blocking it until they reach 60 years of age, Anton Marcus – Joint Secretary of the Free Trade Zone & General Services Employees Union told the Business Times.
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 (NLAC) meeting which is the tripartite apex body to discuss policy-related labour matters and advice the Minister
of Labour.
This move will help the government to block Rs. 500 -600 billion of refund money in the EPF to utilise it for public affairs, a financial analyst said.
It could be used to borrow funds from the EPF at low-interest rates, and invest them as well as utilising it for debt repayments, he added.
The EPF represents the largest source of funds for government domestic borrowing, exceeding even the amounts contributed by savings institutions and commercial banks.
As the increase in the working age population and thus the workforce and the growth of the formal sectors result in increased contributions to the Fund, the incentive to remove political interference with the EPF remains low.
As a result, the defined contribution features of the EPF have been seriously undermined and a widening gap has emerged between the notional and actual performance of the EPF over time, an Economic Analysis report revealed.
Earlier there were attempts to compulsorily retire workers at 55 years instead of giving extensions of service till 60 years which was once, the practice.
| EFC raises concerns over budget proposals
The Employers Federation of Ceylon (EFC), the unofficial trade union of employers, has raised concerns over the compulsory retirement age for private sector employees by amending the Employees’ Provident Fund (EPF) Act, introduction of a Social Security Fund as well as implementing a daily wage of Rs.1,000 for the plantation workers. In a circular to members, it said the EFC policy relating to determining retirement age of private sector employees as well as wages are well established and considers many factors including sustainability of companies. “For instance, it has been our position that the issue of retirement age should be determined by parties and agreed contractually, allowing many related issues such as affordability, ability to work, health and safety of employees as well as matters relating to their wishes – e.g. on how superannuation benefits should be enjoyed – to be considered,” it said. The EFC said it long opposed mandating of wages for the private sector – other than determining minimum rates of wages, again through ‘tri-partite processes’ – as it cuts across the principles of determining wages based on market forces and employee involvement including Collective Bargaining. “The workers of Regional Plantation Companies (RPCs) – in respect of whom the authorities are trying to intervene in this instance– have long standing collective agreements in place which are applicable for the entire industry and considered as a ‘model’ by the International Labour Organization. Whilst such matters are best addressed by the stakeholders themselves, ad hoc interventions are likely to have serious consequences for all employers and the national economy, especially at times like the present,” it said. It sought an urgent meeting of the tripartite body – the National Labour Advisory Council to discuss these contentious proposals. |