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Wed, 26 November 2014 15:18:42
Sri Lanka may deduct more money from private worker salaries
24 Sep, 2010 17:24:39
Sept 24, 2010 (LBO) - Sri Lanka's government may take away more money from the salaries of private sector workers to set up another pension fund, a government minister said, amid concerns about the management of an existing fund.
The new pension fund may take up to two percent from the salary of a private sector worker and make employers contribute another two percent, labour minister Gamini Lokuge said.

Final details of the new pension scheme are being worked out, Lokuge told Vimasuma.com, our sister news website.

The minister said government may also contribute to the new pension fund.

"Right now the government's contribution to the pension fund is being calculated," Lokuge said.

The 'government' gets money from taxing the people, borrowing or printing money and creating inflation, but Sri Lanka's rulers have for years have behaved as if the government has its own sources of money.

State enterprises which could generate money are also making record losses. Critics say any government spending therefore increases the burden on all the people including private sector workers and is therefore a deceptive practice.

State workers and politicians do not have to contribute for their pension and which has defined benefits and gets it from state tax revenues. They also do not pay income taxes on their salaries while private sector workers are forced to pay income tax.

At the moment private sector workers contribute 8.0 percent of their salaries to the Employees' Provident Fund' (EPF) which has been largely used to finance government borrowings at rates that are not fully market determined.

The employer contributes 12.0 percent.

Another fund has been made with a 3.0 percent of a salary contributed by employers. Private sector workers have no say on the investment policies of either fund, regardless of their age, financing needs and ability to bear risks.

Even the earnings of the EPF are taxed while state workers and politicians get tax free pensions.

Some have resorted to desperate measures like defaulting on loans collateralized from their pension balances to get the money out.

A few years ago an attempt to create a contributed pension fund for state workers was scuttled by the next administration that came to power.

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READER COMMENT(S)
6. terrance Sep 27
This is day light robbing in 2010 and no say for priate sector employees. currently we pay enough and this is a added burden. better sort out where there is waste eminent.
5. Saman Sep 27
Waste and inefficiency are rampant at the EPF and ETF. Why do we need to bodies anyway? Two sets of forms, two sets of returns, two st of payments - this only increases the administrative burden and costs on the employer.

Cost of administration of the two bodies is borne by the contributors. Reform the ETF and ETF first, by merging the two into a single entity under the ETF before setting up anything else.

4. Sri Sep 26
This is going to make more private workers go to the side of the employer. Then they will become as contract workers, no contribution from the employer, but on the other hand no loss of money from their pay. Workers don't have money to their daily living, So do you believe they want to save money for their feature?
3. Handle Sep 25
Is there anyone who doesn't see this is the long approach to increasing state worker pensions instead of an immediate salary increase?
2. Kumara Ratnayake Sep 25
Is this minister out of his mind? Is he trying to find another innovative way to rob private sector money?? I guess, it would be good idea to consult Mr. Arjuna Ranatunga to find out!!! Mr. President, pls dont let such corrupt ministers to ruin the private sector growth in this manner..!!
1. ROhan Silva Sep 24
Stupid!!! why not from the Rs. 50Bn eating state sector employees of whom majority are sleeping babies with no output!!!!