Farmers’ Pension Scheme in the red, not viable, says AG

By Chandani Kirinde

The Auditor General (AG) has said there is serious uncertainty about the viability of the Farmers’ Pension Scheme after the latest audit showed that the finances of the Fund has deteriorated from a surplus of Rs 214 million in 2008, to a deficit of Rs 741 million in 2009.

Total income of the Fund, for the year ending December 31, 2009, was around Rs 362.4 million, while the expenditure was over Rs 1.1 billion, the Auditor’s Report contained in the annual report of the Agricultural and Agrarian Research Board presented to Parliament on Thursday revealed.

In 2008, the income was around Rs 716.2 million, while expenditure was around Rs 915.6 million.
“Even though a part of the administrative expenses had been met from government grants, the financial position of the Fund was critical. As such, there is a serious uncertainty about the viability of the Farmer’s Pension Scheme,” the AG said.

Among the matters referred to in the AG’s report is the case involving the payment of compensation to farmers affected by the closure of the Mavil Aru anicut in 2006.

In his observation, the AG said that, a Cabinet memorandum dated September 26, 2006, allocated Rs 176 million from the Farmer’s Pension and Social Security Benefits Scheme for the payment of compensation to farmers affected by the closure of the anicut. “However, investments amounting to Rs 194,169,155 had been discounted for this purpose, and a sum of Rs 119,417,639 had been paid as compensation. The compensation paid has been continuously shown as receivable from the Treasury,” the report added.

The AG also said that, even though a court case in connection with the Mavil Aru incident is pending, it had not been disclosed in the notes of the Financial statements furnished by the Management of the Board, as is required according to the law.The AG also found that, while the total contributions collected from farmers for the Scheme in 2009 was around Rs 148.7 million, while over Rs 9,555 million worth of pension payments were made, which is over six times the contributions collected.

The Board has also fallen back on implementing the computerisation programme of the personal accounts of contributors to the Scheme, for which Rs 21.5 million was paid in 1987. But 21 years after the establishment of the Scheme, this has still not been done.

The Audit Report also highlighted a case pending in the High Court, where 48 cheques totalling over Rs 2.7 million and bank drafts totalling over Rs 7.1 million had been allegedly misappropriated by two Directors and one Assistant Director of the Board.

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