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Cabraal gets 74% of earlier salary as pension and Rs. 400,000 as monthly pay
The Central Bank of Sri Lanka (CBSL) has passed a total of Rs 7mn for the arrears of newly-approved pensions for current and former Governors, including for Ajith Nivard Cabraal who is on his second term, authoritative sources said.
Mr Cabraal is now receiving 74 percent of his earlier salary as pension and Rs 400,000 a month as current salary–up from the Rs 150,000 immediate predecessor Indrajit Coomaraswamy earned. Arjuna Mahendran, who left CBSL over bond scam allegations, made Rs 70,000 a month and was excluded from the new pension scheme.
Having taken over as CBSL Governor in September 2021, Mr Cabraal will get his next pension based on the new salary. The bulk of arrears was paid to him, the sources confirmed. W. D. Lakshman, who was made to retire to make way for the new appointee, also gets a lifetime pension having served just two years at CBSL.
Before he assumed his second term, Mr Cabraal was State Minister of Finance, Capital Markets and State Enterprise Reforms. The Sunday Times exclusively reported that he had requested a pension for his previous eight-year stint from July 1, 2006, to January 8, 2015. He claimed that his appointment letter had provided for one, and that it had not been paid “even 4 years after resigning”.
However, Mr Cabraal’s appointment letter had deemed him eligible only for pension benefits already “available to staff”, authoritative sources said. At the time he assumed the position, employees recruited after 1998 were still not entitled to them.
Mr Cabraal later admitted that he had canvassed Mr Coomaraswamy for the facility while he was Governor. But the widely respected economist had referred it to the appointing authority, who is the President.
After the change in administration, Mr Cabraal continued his efforts with the Monetary Board of Sri Lanka (MBSL) which then questionably approved a pension scheme for all CBSL Governors despite legal experts saying it did not have the authority to do so under the Monetary Law Act (MLA).
The MBSL’s general powers are contained in Section 10 of the MLA which provides authority to approve salaries for the staff. Section 10(b) provides for pension schemes. The Governor, however, is not a member of the staff under the MLA. There are, therefore, separate provisions on his or her appointment, remuneration, etc, in Section 11. Section 11(3) states how the Governor’s salary is fixed by the President as the appointing authority on the recommendation of Minister of Finance.
Under the new scheme, 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 relates to parliamentarians who received a pension after five years (the 2022 Budget proposes that this, too, be raised to 10 years).
Until 1998, all CBSL employees, including Governors, and State Bank workers were eligible for pensions. That year, however, the Government suspended pensions for new employees while sustaining it for those deemed already qualified.
Then, after requests from public sector trade unions, all Government employees were again made eligible for pension. This was still not 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 MBSL—which is headed by the Governor—to approve pensions for its own Chair. Therefore, everyone who held that position after A. S Jayawardena (who was Governor from 1998 to 2004) was deemed ineligible.
At the time Mr Cabraal finished his first term, there was still no pension scheme available. When a new one was finally brought in, the criteria included at least 10 years of service. Again, it did not make Governors eligible. Nor did it provide any exception to Governors of the required service period. This only changed with the MBSL’s decision this year.
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