Financial Times

New pensions scheme for those out of the loop
Domestics, migrant workers in new pension schemes
By Nimesha Herath
Fulfilling the long-awaited need for Sri Lankan migrant workers, the Sri Lanka Social Security Board (SLSSB) will be launching a new pension scheme for them sponsored by the Sri Lanka Bureau of Foreign Employment next month.
Another scheme for local domestics and Sri Lankan women, such as housewives and those not fully employed is also to be offered and can be expected before June 2006, along with many other schemes on line.

Lakshman Hirimutugoda, Chairman SLSSB, said for the first time in the pension schemes offered by the Board, beneficiaries will have access to loan facilities together with many other additional benefits.The board is a non-profit making institution established to provide pensions for those in self-employment and doing informal jobs.

The new contributory pension schemes “Dhanalakshmi”, “Surekuma” and “Sarana” (recently launched) have been created to shift the financial burden away from the government in making payments for pensioners. Mr Hirimutugoda said it is the board’s aspiration to increase the number of youth in self-employment and uplift their social standards. The pension schemes are targeted to attract people aged from 18 to 59.

He told The Sunday Times FT that “earlier in the ‘Sahana’ pension scheme to receive a monthly pension of Rs 2,500, the beneficiary has to make quarterly payments of Rs 50.”

“This was a huge burden on the government as a result of the cost to the state. To reduce this pressure on the Treasury, the board decided to subsidise or get sponsors for these schemes. Donors, who want to invest on poverty alleviation, can contribute to these schemes. Organisations like Hameedia’s, the Foreign Employment Bureau of Sri Lanka and many other non-government organisations (NGOs) have already come forward as sponsors. For those without a sponsor, the Treasury and the board will shoulder the burden.”

Under the “Dhanalakshmi” scheme, the beneficiary has to pay Rs 40 a month till the age of 59 in order to get a Rs 1000 pension. If he or she wants to get Rs 5000, they pay five times Rs 40 [Rs 200] a month. The customer has to pay a lump sum depending on his age. “It is an age related scheme for the lowest households in Sri Lanka,” Mr. Hirimutugoda explained.

Prins E. Christy Nesiah, General Manager SLSSB, said that any surplus recorded will be passed on as bonuses to the beneficiaries. Furthermore, these schemes offer a bundle of benefits making them attractive to both client and benefactor.

“This is an inflation-linked policy where any accumulated amount will be paid. The pension schemes will also bring about benefits like annual bonuses, medical examination reimbursements, higher education facilities, festival advancements, payment of death gratuity equal to five times of the pension, etc.,” he said.

Mr. Hirimutugoda also said that the future plans of the board will target tax payers, journalists and EPF, ETF contributors in designing pension schemes. Presently, non-tax payers and all those excluding government pensioners, the agriculture sector and fishermen are eligible for the schemes.

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