Apr 28, 2014 (LBO) – Sri Lanka is making fresh attempts to prevent private sector workers from withdrawing their retirement contributions once they reach 55 years of age, a media report said. The Sunday Times newspaper quoting an un-named official source said the Finance Ministry is drafting legislation to change the governing acts of the Employee’s Provident Fund and Employees Trust Fund to make them into a ‘pension’ or annuity.
At the moment the balance in the ETF made up of a 3 percent contribution from the salary can be withdrawn when a worker changes the job. The full balance of the EPF made up of 20 percent contribution can be withdrawn at the age of 55 as a lump sum.
With private sector workers rapidly ageing, inflows to the fund could become net outflows as early as a decade from now, the report said.
At the time the state will lose a key source of ‘captive’ funding to cover its deficit budgets.
Up to now the state has only targeted the retirement funds of private sector workers.
Unlike in countries like Singapore where all citizens are part of the EPF in Sri Lanka only private sector workers contribute to the fund. State workers are given pensions from tax