Middle-income status may push private sector for pension schemes: Cabraal

Sri Lanka’s private sector may have to look at models for superannuation and pension schemes in order to cope with the changing macroeconomic fundamentals, as Sri Lanka moves towards the middle-income country status, according to Central Bank of Sri Lanka (CBSL) Governor Ajith Nivard Cabraal.

“It is now time for all companies to realize that they will have to move into superannuation schemes a lot more seriously than they have done in the past.

We are in an era in our country where you will see interest rates coming down as a result of inflation moderating. We are looking at macro conditions that will ensure that inflation will stay in single digits, so interest rates will be much lower than what we’re used to,” Cabraal stated.

Delivering an address at the recently held Best Corporate Citizen Awards, organised by the Ceylon Chamber of Commerce, Cabraal warned that the time of depositing funds in finance companies and banks alone would no longer be sufficient to maintain a viable pension fund for Sri Lanka’s retirees.

“In such a situation, we will now have to look very carefully at what our pension products and superannuation schemes are going to be because the time when you could just put money into finance companies and banks may not be as attractive as it once was in the past.

When looking at employee relations, companies should also reflect on the new trends that the economy is taking and prepare themselves for these new trends in Sri Lanka’s economy,” Cabraal cautioned.

He added that the Sri Lankan corporate sector must also extend a holistic approach in employee and customer relations, as part of the efforts towards becoming responsible corporate citizens.

“Companies must look at the inherent manner in which they deal with employees and customers. We brought a customer charter for the banks and many embraced it willingly and they embraced it as part of the transition to a new level of development and service.

Companies also must tell their employees, customers and the public what their benchmarks are. It’s always a good thing to talk about your values and make sure the employees abide by those values as well, while also being conscious of their responsibility to be sensitive to religious, ethnic and national practices,” Cabraal advised.

“Sri Lanka’s success in the economic field has largely been achieved without damaging the environment of our country. Today, we recognize companies for their contribution to the people, planet and profit. All three are equally important. All of you are in the field for profit but these are highly interconnected ideas. The more we realize this, the more we will respect the role of the three Ps,” he noted.