Lionel WIJESIRI

Human Resources Senior Minister, D. E. W. Gunasekera, recently spoke about the social security system in Sri Lanka. He said that the National Human Resources and Employment policy is now under submission at the Cabinet of Ministers and many issues on social protection and labour strategies have been addressed. Speaking on the retirement benefit schemes, he said, We must reconsider the feasibility of establishing a pension scheme for the workers in the formal private sector. The abortive private sector pension fund needed a much more critical study, analysis and assessment by professional actuaries. He also highlighted the need for a security scheme for informal sector.

Senior Minister D.E.W. Gunasekera

Fund management has become a controversial issue today, he continued, "We have to consider seriously whether we have reached the point of diminishing returns in so far as the management of EPF and ETF is concerned. While we should appreciate the concerns of the workers and their sensitiveness to changes, it is equally important to consider the long term sustainability of these funds," he said.

Human Resources Senior Minister is in the right track. Time has come to recognize that our present social security retirement policy needs to adjust to the changing economic, demographic and social environments. It is also a good idea that the government has begun to make extensive policy analysis and is planning to set up major policy reforms geared towards finding a new balance for social security retirement schemes.

Sri Lanka is currently fortunate to have an extensive social security retirement benefit system with a conceptually modern social assistance scheme. In addition to the universal health care system covering 100 percent of the population extending from birth to death, the country has comprehensive scheme of pensions for public servants, farmers, fisheries and self-employed, and the EPF, ETF and payment of gratuity for private sector workers. The writer believes that, recognizing the changing conditions, improvements are necessary with respect to the targeting and the adequacy of retirement benefits levels, quality and cost effectiveness of the public health care for the old, the personnel coverage of the income security schemes and the adequacy of benefits provided by the provident funds.

As the experience of the developed countries has shown, the presence of a reasonable social safety net for all individuals and households enlarges and strengthens the labour force of a country, adds to its capacity to promote growth and to accept change, and underpins a greater degree of political and social stability. Furthermore, entitlement to adequate levels of social protection is recognized explicitly in the several international declarations dealing with the matter and in the various international labour standards on social security and related issues.

For the world as a whole, three types of countries can be distinguished. In most developed countries and some countries in central and Eastern Europe, full personal coverage has been reached for some benefits, but not for others. In these countries, the extension of coverage can probably be achieved within existing structures. Most of these countries are contemplating new architecture for the financing of pension outlays. They are presently giving careful thought for the development of a new consensus. However, the overwhelming majority of the worlds population, belonging to lower-income developing countries, is without some form of income security in old age or disability.

In many middle-income developing countries, where retirement benefit coverage does not exceed 50 percent, extension of social security coverage will have to be achieved by a combination of adapting existing social security structures and experimenting with new schemes. Sri Lanka belongs to the third category.

Two main problems are at the heart of the issues facing social security retirement schemes in almost all countries of the world. These are questions of coverage and governance.

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‘Retirement is the beginning of a journey, not an end’