Wealthiest 20% enjoy half of SL’s pension benefits: IPS

10 October 2024 12:13 am Views - {{hitsCtrl.values.hits}} 8 Bookmark

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By Nuzla Rizkiya
A recent study conducted by the Institute of Policy Studies (IPS) highlighted a significant disparity in Sri Lanka’s Public Service Pension distribution scheme, revealing that around 50 percent of the pension benefits were enjoyed by the wealthiest 20 percent of the population.
The findings emerged from the IPS study that sought to explore the equity of tax and government welfare programmes, in an effort to understand which part of the population bears the largest tax burden and who benefits the most from the government welfare schemes.
The analysis was conducted using the data from the Household Income Survey (HIS) in 2019 and Labour Force Survey from 2022, to examine both the direct and indirect taxes as well as government spending on key welfare programmes such as pensions and subsidies.

“The Public Service Pensions, which account for 8 percent of the government’s recurrent expenditure, favours the richest of households. Forty-four percent of the pension receivers belong to the wealthiest 20 percent of the population. Only 11 percent of the pension benefits are directed towards the bottom 40 percent,” the study stated.
Moreover, the study revealed that the pension expenditure in Sri Lanka increased by 20.5 percent in 2023, due to a policy decision to reduce the retirement age from 65 to 60, leading to a sudden surge in the number of retirees.
The number of pensioners increased by 4.2 percent, from 676,430 in 2022 to 704,795 in 2023, after the government mandated the retirement of public servants aged above 60 by the end of 2022.
The move was among several other measures taken to cut down the capital expenditure from the state coffers, as the country grappled with an unprecedented economic crisis during the time period.
“We can observe that the Public Service Pension programme in Sri Lanka is not progressive. One of the main reasons for the unequal distribution is that most pension beneficiaries come from the better-off segment of society. Therefore, implementing a contributory pension fund is crucial for the sustainability of the system,” said IPS Research Economist Priyanka Jayawardena during the launch of the IPS annual report, Sri Lanka: State of the Economy 2024.
The Public Service Pension scheme in Sri Lanka is the primary pension programme allocated to the permanent public sector workers in Sri Lanka, who must complete a minimum of 10 years of service to qualify.
The findings of the IPS analysis were calculated using the household income groups derived from the 2019 HIS data.

Comments - 8

Judge Thursday, 10 October 2024 08:35 AM

If this is the case, the co-relation between pension going to the wealthiest is clear. Those public servants, whilst they were working, might have been the biggest bribe takers and when they retired already had accumulated massive wealth via corrupt means. It is not hard to understand, is it?. Solution: Have a very strong anti-corruption system and actively prosecute public servants caught in corrupt conduct. People's only hope is that the new NPP government will do it and if not, they won't last long either.

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Spartacus Thursday, 10 October 2024 09:30 AM

We know who that wealthy 40% is, they are no other than Politicians, all wealthy to the hilt and this not the only benefit they get.

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Perera Thursday, 10 October 2024 09:48 AM

IPS conclusion is wrong and they have come to this conclusion by using a flawed assessment process. IPS study was about pension incomes and not about recipient's wealth. IPS apparently doesn't know the difference between wealth and income and has assumed both are same.

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Rajan V Pillai Thursday, 10 October 2024 10:06 AM

The Classic example is the Pension Scheme of top Central Bank employees . The Pension, I understand is nearly 90% of the Last Drawn Salary. During their service they get secondment to the service of IMF, World Bank , and ADB etc. As said in the Article they become the richest in Public Service. We congratulate their talent , Professionalism and Hardwork. When a revision of salary is revised in Central Bank it is also extended to retired Central Bankers at the same percentage which is welcome On the other hand Other Public Service Officers have to form organisations and struggle for increase in pensions to meet hyper inflation. Medical Practioners and Other Professionals like Engineers having Practice after retirement could be considered as rich. Rich People do not come to Govt. Jobs, Govt.Servants become rich by saving.

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Lanka Shantha Thursday, 10 October 2024 10:09 AM

Please look after the Senor Citizens' who don't have pension or any other income.

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Rajan V Pillai Thursday, 10 October 2024 11:17 AM

The researcher appears to have taken irrelevant assumptions. . Till 1971 the retirement age was 60. In 1971 retirement age was reduced to 55. Again it was increased to 60 somewhere in 1980. During the brief period Basil was the Finance Minister the age limit was increased to 65. Then Came President Ranil, who reverted the age to 60 years, except for Doctors and Judges. Governments have also changed the Pension Payment formula regularly. In 1991 Government gave Pensions to those who voluntarily retired after 10 Years in Service, where many thousands retired. People have not become wealthy not because of Government Jobs. But because of appreciation in the value of immovable property they had, sometimes sky rocketting , throughout Sri Lanka,. More Demand for Land due to Foreign employment , Investors, FTZ and rapid huge Development Projects.

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Very rude and wicked comments by Kapruks Thursday, 10 October 2024 02:15 PM

The research is based on wrong assumptions, and as a result gives a wrong conclusion. This brings forth very rude and wicked comments. Pension is given not based on financial status of the pensioner, but is based on his/her salary and his/her number of years of service. What a person earns AFTER retirement, is definitely on the ability and capacity of that person. They did not have to rob or take bribe to become rich. Foreign employment opportunities decide their wealthy status. IS IT WRONG?

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Dilakshan Seneviratne Thursday, 10 October 2024 04:47 PM

Looks like the new government has another anomaly they’ll have to look at. Overall the whole system seems inequitable, how come banks, big corporations like CEB and government departments only pay pensions? There has to be a universal pension scheme and retirement age must be at least 65. A bankrupt country can’t afford able people sitting at home, when people are short to fill jobs, and when increasing economic growth is required.

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