The General Secretary of the CFTU D.W.Subasinghe presents amendments on behalf of ten Trade Unionsat the meeting of trade unionists summoned by the President to Temple Trees on April 25th.
Following the declaration in last year’s 2011 budget speech by the President, who is also the Minister of Finance, that three pension schemes, one for private sector employees with 2% mandatory contributions of the salary by both employees and employers, another scheme for self employed persons, and the other for immigrant workers, a Bill drafted by the Ministry of Finance to implement the first scheme was tabled to parliament on the 8th of April. This raised quite a furore as it had not been presented or discussed with the trade unions and employer organizations and it had many defects and contradictions. The draft Bill had been made available only at the government bureau of publications.
The Ceylon Federation of Trade Unions (CFTU), the private sector trade union associated with the Party, and nine other trade unions including the Sri Lanka Nidahas Sewaka Sangamaya (SLNSS) the trade union associated with the main ruling party, prepared a document to be submitted to the President at the 25th meeting with their criticisms and proposals for amendment. At the request of the participant trade unions the document was presented by the CFTU General Secretary comrade D.W.Subasinghe. At times there were heated exchanges. The final joint trade union request was to postpone the adoption of the Bill in Parliament until a proper discussion with the stake holders is held. The main trade union criticisms and amendments to the draft Bill were as follows:
- According to the draft Bill when the 2% contributions are completed for 10 years an employee is eligible to become a member of the Fund. Moneys so contributed and interest accrued will constitute his individual account. However when monthly pensions are paid and there is no longer any money lying to his credit in his individual account that employee ceases to be a member of the Fund. This was unacceptable to us. In that case the Fund does not deserve to be called a Pension Fund! We insisted that the Fund must be strengthened to pay monthly pensions for life.
- The Fund is to be constituted with 2% contributions, 10% of the annual profits of the Employees Trust Fund, “inactive accounts” in the Employees Provident Fund of members over 70 years of age, a one billion Government Bond of long term maturity, 10% of the gratuity payable at retirement of an employee, 2% of the EPF amount payable on retirement and 10% of earnings lying to the credit of an employee in cooperative society under the Cooperative Societies Law.
- The monthly pension quanta stipulated were 15% of the “simple average” salary for those who have contributed up to 19 years, 30% for those with 29 years and 60% to those who have contributed for 30 years and over. We requested that the percentages be increased by 33%. Today 15% of the basic salary of a worker is about Rs 1500, which is less than half a US$.
- On the death of a member the draft Bill provided for a lump sum payment to children under 18 years of age without anything for the spouse. We denounced this and insisted that the spouse should be paid a pension.
- A permanently incapacitated member due to accident or ill health was to get a lump sum payment of 60% of the account lying to the credit of the member with no reference to a monthly pension. We demanded that such person be paid a pension after incapacitation.
- As we felt that many unacceptable restrictions on benefits included in the draft Bill arose from weakness of the Fund as proposed, we requested that (i) the clause on charging administrative costs of the Fund incurred by the Central Bank’s Monetary Board and the Commissioner of Labour be deleted, and that the state should bear such expenditure until the Fund becomes financially viable to pay its way while discharging all due obligations to its members. (ii) the 10% income tax now wrongly charged on the interest from investments of the EPF money be credited to the Fund. The 2008 EPF annual report says the tax that year was Rs 5.4 billion!
- We requested that the clause which says that surcharges on employers who delay the 2% monthly remittances would be credited to the Fund to be amended to the effect that such surcharges be credited to individual accounts of affected employees.
- The clause on investments of moneys of the Fund stipulates that up to 33% of it may be invested in the private sector stock market. We severely criticized this and demanded that it be amended to restrict such investments to 5%.
- We also criticized the clause on interest rate guarantees on investments in government securities stipulated to be not less than 2.5%. While that may be the minimum we requested that the interest rate should not be less than the average rate on government securities for the past 12 months.
- In the matter of “inactive accounts” of the EPF mentioned in paragraph two above we pointed out that it violates the EPF Act and requested a proviso to be introduced to the effect that if any member over 70 years or his heirs if they appear, such claims would be settled. This was acknowledged and an amendment agreed to.
- In the clause on setting up a Consultative Committee, to be consulted from time to time by the Monetary Board of the Central Bank, provided for appointment of one representative each from employers and employees to the Committee . We requested that such representation be enhanced by including two more members each from employees and employers. This was agreed to by the President.