News
Pension with arrears for Cabraal; lifetime pension for Lakshman
Ajith Nivard Cabraal–who is due next week to take over as Central Bank (CB) Governor for a second time–will receive a pension with arrears for his former eight-year term while qualifying for another pension at the end of his second stint under a new scheme recently approved by the Monetary Board (MB).
The second pension will be calculated on the basis of his new, higher salary. Meanwhile, W. D. Lakshman, who is retiring to make way for the new appointee, leaves with a lifetime pension having served just two years at the Central Bank.
The Sunday Times reported last week that the MB had approved pensions with arrears for several former and the incumbent Governor irrespective of the lengths of their tenures. The MB is headed by the Governor. The CB’s Secretariat Department is implementing the decision and working out the arrears payments.
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 took up the matter after Mr Cabraal, State Minister of Finance, Capital Markets and State Enterprise Reforms, made requests for a pension for himself. This week, Media Secretary of the Ministry issued a statement saying Mr Cabraal had been Governor from July 1, 2006 to January 8, 2015, and that his appointment letter had provided for a pension.
However, it had not been paid “even 4 years after resigning”, the statement said, admitting that a request had been made to former Governor Indrajit Coomaraswamy. Mr Cabraal also told the media he did not avail himself of the duty free vehicle he was entitled to.
Mr Cabraal’s appointment letter deems him eligible only for pension benefits already “available to staff”, authoritative sources said. At the time he assumed the position, however, employees recruited after 1998 were still not entitled to pensions.
Despite demands by trade unions for a scheme for this category of staff, Mr Cabraal did not introduce one during his eight-and-a-half year tenure. At the time he retired, therefore, there was still no pension scheme available.
When a new pension scheme was finally brought in, the criteria included at least 10 years of service. Again, it did not made Governors eligible. Nor did it provide any exception to Governors of the required service period.
“A minimum period of one hundred and twenty (120) months of permanent active service at the time of retirement (as specified in 1.4 below) is required for an employee to be eligible to receive any benefit under this new pension scheme,” it states. “Service requirements for the retirement should be in accordance with the prevailing rules and regulations of the Bank.” This means none of the former or incumbent Governors was eligible for pensions under that scheme.
Meanwhile, under the July 2016 Trade and Investment Policy Circular (No: 01/2016) outlining the “Scheme for Issuance of Motor Vehicle Permits on Concessionary Terms” neither Mr Cabraal nor Mr Lakshman is entitled to a duty free vehicle as they have not completed the stipulated number of years in service.
Only Executive Grade Officers finishing 12 years active service and confirmed in “senior level” posts at the CB qualify.
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 Arjuna 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.