Mar. 06 (LBO) – Commercial Bank of Ceylon has sought expertise of a foreign actuarial to structure a pension buyback scheme for employees, officials said Monday. Sri Lanka’s most profitable local commercial bank has taken this option to hedge risks against a future rise in interest rates.
“Most pension plans in Sri Lanka are structured on a deferred basis, irrespective of changes in interest rates,” the bank’s Managing Director Amitha Gooneratne told journalists.
Some 1,600 staff, who qualifies for the bank’s retirement plan, is currently paid a pension based on their last salary and the number of year’s service.
“This is quite expensive, in a rising interest rate environment,” the bank’s Senior Deputy General Manager (Finance & Planning) Ranjith Samaranayake explained.
“Instead, we want to ask employees to voluntarily give up their pension rights to us, for this we have sought a foreign consultant,” Samaranayake said.
Set up in 1992, the bank’s pension fund covered those who were between 45-50 years. The fund, which was subsequently closed in Dec. 31, 2001, has assets worth Rs. 2.63 billion in fair value todate.
The actuarial prese