May 24, 2014 (LBO) – Sri Lanka’s Employee’s Provident Fund is running out of new cash to repay beneficiaries as the private sector population age rapidly but attempts by the state to deny withdrawals at maturity will be resisted, a legislator said. Withdrawals were 48.7 billion rupees in 2012 and 50.2 billion rupees and the cash available for the state deficit spending rose to 22 and 30 billion rupees.
However with changing demographics, the EPF cashflows are eventually expected to turn negative.
Analysts say Sri Lanka will have to tighten the budget deficit, reduce the bloated state sector
to a level that is affordable to citizens and also end special pension privileges of the elected ruling class and their close associates, and end losses in state enterprises.
The massive losses of state-run SriLankan and Mihin Air amounting to over 20 billion rupees a year (around the net balance of the EPF in 2012) were highlighted at a recent forum on pensions.
De Silva said unproductive investments with borrowed money that will not generate sufficient returns will worsen the problem in the future.
Other options include increasing the retirement age (which several countries have already done) and allowing foreign workers to come to S