A proposal to provide increased pension benefits for those who retired after 2017 has been abandoned as the plan would cost the government a staggering Rs 130 billion annually. A senior Treasury official said that instead of increasing the pensions, the Government would come up with a revised scheme where the pensions of those who [...]

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No pension hikes: Previous Govt.’s proposal quashed

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A proposal to provide increased pension benefits for those who retired after 2017 has been abandoned as the plan would cost the government a staggering Rs 130 billion annually.

A senior Treasury official said that instead of increasing the pensions, the Government would come up with a revised scheme where the pensions of those who retired after December 31, 2017 would be calculated on the salary scales as at the end of 2017.

Under a proposal of the former Government, the pensions were to be calculated on the basis that they had served until 2020. Accordingly, those retiring were to receive a minimum of Rs 3,000 additional pension, with higher grades due to receive more than Rs 10,000 a month.

The previous UNF Government’s pension plan was to apply to some 100,000 employees who retired after 2017.

The official explained that the implementation of the former government’s proposal would lead to the  creation of a major salary anomaly among 600,000 pensioners, who retired before 2017.

At present, the Government spends Rs 240 billion annually for the payment of pensions and if the proposal was implemented the annual pension bill would have shot up to Rs 370 billion, he said. “The increased amount will be a severe burden on the Treasury and, therefore, implementation of the proposal will not be possible.”

He said under the new formula to be worked out within the next six to seven months, all pensioners would be treated equally.

The Treasury is due to discuss the issue further with Premier Mahinda Rajapaksa, who holds the finance portfolio.

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