The government plans to tinker with the Employees Provident Fund Act to set up a new contributory pension scheme for public sector employees.
The new pension scheme will kick in from January 1, 2003, with new recruits to the public cadre contributing eight percent of their salaries and the government forking the balance 12 percent.rn
rnThe new fund will be a government controlled savings scheme modelled on similar lines like the present EPF and Employees Trust Fund.rn
rnThe Monetary Board of the Central Bank will takeover the management of the new scheme, with the EPF coming in as administrators, Central Bank Deputy Governor, W A Wijewardene told Lanka Business Online.rn
rnSri Lanka currently has a pay as you go pension scheme for its public servants, with the present 300,000 pensioners costing the government Rs. 31 bn in 2002. rn
rnThe Central Bank estimates a Rs. 1,000 pension increment would push VAT up by 0.7 percent, while a Rs. 1,000 pay hike for public servants would raise VAT by an addi