Annual Report 2010 - Ministry of Finance and Planning

Ministry of Finance and Planning Sri Lanka > Annual Report 2010Proposed Establishment of Contributory Pension Funds (April 2011)In the 2011 Budget, it was proposedto setup three separate contributorypension funds to ensure that therewill be retirement benefit schemes topeople who reach non-working age.Accordingly, 2 separate legislationswere placed before the Parliament inApril 2011, to set up the Employees’Pension Benefits Fund, the ForeignEmployment Pension Benefits Fund.The Self Employment Pension BenefitsFund is being drafted.Box 3.7Proposed Employees’ Pension Benefits Fund(Bill Submitted to Parliament in April 2011, with Proposed Amendments)Salient Features• Administration of the Fund - Commissioner General of Labour.• Maintenance of the Fund - Central Bank of Sri Lanka under the purview of the Monetary Board.• Audit- Auditor General.• Coverage- All employees not covered under the Government Pension Minutes or otherPension Funds approved by Commissioner General of Labour.• Membership - Mandatory - for employees who have 10 years or more of cumulative service with one or moreemployers, before reaching the age of 60;- Optional -for employees who have less than 10 years, on the basis that a lump sum will becontributed for the ‘short period’.• Pension Payable– Commencing from 60 years of age throughout the life of the employee.• Measure to Prevent Misuse - Annual verification whether member is alive.• Return of a Lump sum – A lump sum equivalent to 60 per cent of the amount lying to the credit of theindividual account, will be paid to any member who ceases to be employed whilecontributing, due to a permanent or total incapacity.- If the member dies before drawing a pension, a lump sum equivalent to 60 percent of the amount lying to the credit of the individual account, will be paid tothe surviving spouse or any child below 18 years of age or physically or mentallydisabled.• General CategoryContribution; An amount of;- 2 per centum of the monthly Gross Salary of the employee, being the employer’scontribution, payable monthly.- 2 per centum of the employee’s monthly Gross Salary, being the employee’scontribution, payable monthly.- 10 percent of the employee’s Gratuity, to be transferred to the employeesindividual account at the time Gratuity is paid.- 2 per cent of the Gross Balance in the individual account in the Provident Fund,to be transferred to the employee’s individual account when EPF is paid.• 3 State Banks- Institutions that do not extend Pension benefits to its employees although havingextended such benefits prior to 01.01.1996. Will be applicable to employees whohave joined such institutions from the date of removal of such pension benefitsand the date of this Act.197