When HNB Assurance Managing Director Manjula de Silva completed a short presentation at Tuesday’s monthly meeting of the Sunday Times Business Club (STBC) on options to invest vis-à-vis the population statistics, veteran trade unionist T.M.R. Rasseedin, President of the Ceylon Federation of Labour quickly intervened saying, “I may now need to change our pensions’ position and call for an old-age pension scheme.”
The two along with Ravi Peiris, Director-General of the Employers Federation of Ceylon (EPC) were on a panel discussing the Pension Bill and pension options for a secure, post- retirement future (visit coverage of the event ).
While ‘Rassi’ as he is popularly known amongst trade union colleagues and Mr Peiris dealt in detail with the recent ups and downs of the Pension Bill and their positions (trade unions, workers and employers) on this controversial piece of (proposed) legislation, perhaps the most interesting piece of information (and non controversial too) for the evening was Mr De Silva’s thoughts on the aging population and, in this context, the need for viable investment options.
The two stark facts from his presentation was that Sri Lanka’s population is fast aging in that the 60+ age group in the population will double to 24.80% in 2041 from 12.50% now while in the ‘rising old age dependency’ graph, he revealed that the working population will be supporting 40% of those over 60 in 2041 compared to 10% now.
In another startling piece of data on savings, he showed a graph which reflected the “How we save” rate of an individual. This showed a high savings rate, reaching a peak and then coming down (when that indvidual pulled out the saving to buy something), then goes up and comes down again. By the year 2041, the up-and-down graph showed there was nothing in the kitty, zero savings! “There is no doubt that people are saving but they are also spending their savings and at retirement age may have nothing to fall back on,” he said, reflecting the need for individuals to resort to a two track scheme – short term (savings to purchase) and long term (untouched until retirement).
The discussion also provided details of the controversial Pension Bill which saw vociferous opposition from the trade unions and employers because it was not discussed in the correct labour forums, and led to protests by workers in which one died in police shooting. It also showed the ‘unsure’ position of the Government.
While Mr Peiris said the EFC was informed by the Labour Ministry that the bill has been withdrawn and will not go through in Parliament, Mr Rasseedin noted that the bill has not been withdrawn from the Order Paper of the legislature nor an attempt made in parliament to withdrawn it. “As such it still remains an ‘active’ bill,” he said.
As reported in these columns over the past three months, workers and employers are calling for a cancellation of the Pension Bill and for the Government to engage in fresh discussions with all stakeholders on a new scheme that would be voluntary and not dip into savings of members of the Employees Providend Fund (EPF).
Both Mr Peiris and Mr Rasseedin said employers and workers are still keen on a private pension scheme but one that would not be forced, dip into their EPF savings and not involve another, monthly contribution. While little attention has been paid to the proposed pension scheme for migrant workers, which is a voluntary one, it’s still on the cards but has its own share of problems. Again this bill is also sans input from migrant workers and other stakeholders.
Following the bloody protests at Katunayake in which a worker was shot and died in hospital, the Government quickly said it was withdrawing the bill but in recent weeks there has been little discussion on these issues.
Part of the reason why there has been silence on this issue is since labour officials and experts have been attending the 100th anniversary sessions of the International Labour Organisation (ILO) in Geneva last month.
No meeting of the National Labour Adisory Council (NLAC) has yet been called to discuss the pension scheme ever since members of this tripartite committee were told – at the last meeting in April – that the Pension Bill would be presented to Parliament.
The population data which showed the growing number of aged people in Sri Lanka raises the urgency in which a durable pension scheme needs to be formulated, quickly. On the other hand, there are various instruments in which people can invest like stocks, long term bonds, unit trusts, life insurance/pension plans offered by insurance companies and property some of which provide quick returns and others, long term returns.
Everyone wants a pension scheme implemented or some cash to fall back on at retirement and the way our population mix is going reflects the urgency of such a scheme. Thus the pension discussions between the Government and the stakeholders must get back on track without further delay. |
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