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Cabraal pushes for pension with arrears for all Central Bank governors
The Monetary Board (MB) has approved pensions with arrears for several former and the incumbent Governor of the Central Bank of Sri Lanka irrespective of the lengths of their tenures, the Sunday Times learns.
The CBSL Secretariat Department is implementing the decision and working out the arrears payments, authoritative sources said. Under the new scheme, all Governors will be eligible for pensions regardless of their service periods, despite other public sector employees requiring at least 10 years of service to qualify. The only exception is Members of Parliament who receive a pension after five years.
The MB’s decision follows requests from Ajith Nivard Cabraal, State Minister of Finance, Capital Markets and State Enterprise Reforms. He was CBSL Governor from July 2006 to January 2015. He lodged this appeal also during the last administration but the then Governor Indrajit Coomaraswamy, sent it to President Maithripala Sirisena, the appointing authority. It received no response.
Efforts were renewed after the Government changed, authoritative sources said. Mr Cabraal did not respond to a text message asking him whether he had been requesting for a pension with arrears for his time as Governor.
The Sunday Times filed a Right to Information request asking whether the MB had decided to make all previous Governors eligible for pension benefits. The CBSL replied: “The Monetary Board has not taken any decision to make all previous Governors eligible for pension benefits recently. Hence, the questions No. 01 to 11 raised by you in your RTI application are not applicable.”
This was “technically correct”, insiders said, pointing out that former Governor Arjuna Mahendran is likely to be exempted as he is embroiled in legal proceedings.
Until 1998, all CBSL employees including Governors and State Bank workers were eligible for pensions similar to other public officials. That year, however, the Government suspended pensions for new employees while sustaining it for those already deemed qualified. The rationale was to introduce a new public sector scheme funded by employers and employees. The existing one was unfunded, with payments being made out of tax income. This was deemed untenable as the number of pensioners was rising at a faster pace than tax revenues.
But after requests from public sector trade unions, all Government employees were again made eligible for pension. This was not, however, extended to State bank or CBSL workers. The State banks later introduced a contributory pension scheme for new employees.
In 2015, under Governor Mahendran, CBSL introduced a similar arrangement for employees recruited after 1998. But this did not apply to Governors as it was deemed unethical for the MB—which is led by the Governor—to approve pensions for its own Chair. Everyone who held that position after A. S Jayawardena (who was Governor from 1998 to 2004) was deemed ineligible.
However, Mr Cabraal in 2015 sent a request to Governor Coomaraswamy asking to also include Governors in the new scheme. The MB referred this to President Sirisena after notifying Mr Cabraal about its inability to make the decision.
Governor Coomaraswamy subsequently introduced a Code of Conduct for MB members to prevent conflicts of interest in decision-making by them. When requests were recently renewed, however, incumbent Governor W. D Lakshman initiated the process to introduce a pension scheme for himself and former Governors who had been deemed ineligible after 1998, authoritative sources said.
The CBSL Corporate Management Committee consisting of all Deputy Governors and Assistant Governors—chaired by Governor Lakshman–submitted a recommendation to the MB and the Board, also chaired by Governor Lakshman, approved the proposal while suspending it for Mr Mahendran. If he is cleared in future, he is also likely to receive a lifetime pension despite having served CBSL from 2015-2018.
Section 3 of the Code of Conduct contains provisions to prevent conflict of interest in decision-making by MB members, including the Governor. It is not known how much arrears will work out to. Mr Cabraal will be the only Governor to receive a pension from both CBSL and Parliament.