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28 October, 2015 08:39 AM Source: Financial Times - Sri Lanka
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Sri Lanka needs to make strong reforms linked to the Government’s fiscal policy to encourage savings and improve inclusion of more people in pension systems, according to UNESCAP officials, as the country faces the challenge of a rapidly ageing population.
United Nations Economic and Social Commission for Asia and the Pacific Population Officer Vanessa Steinmayer referring to the existing pension systems in the Asia Pacific region including Sri Lanka noted they are highly fragmented, creating problems in fairness and sustainability.
In the Sri Lankan context, only 20% of older persons receive a pension from the public sector, whereas 5% receive from the Informal Sector and a further 5% receive from the Public Welfare Assistance Allowance (PAMA) and the Elderly Assistance Programme (EAP). Moreover 50% of the population does not receive any form of pension.
“Pensions play a vital role in the society, therefore they need to be one part of a comprehensive policy on population ageing which includes not only the provision of an adequate income but also provide affordable healthcare. Fiscal reforms are necessary to provide incentives for retirement savings continued. Thus one national pension fund with effectual regulation could certify better delivery and would enable better mobility between sectors and job categories.”
She made these comments at the National Consultation on Pensions in Sri Lanka organised by Institute of Policy Studies (IPS) and United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP).

Steinmayer stressed there are grave challenges which need to be faced by the governments of the countries in this region in order to develop the existing pension systems.
“The system needs to be developed through reforms that improve sustainability and ensure future returns further on. Increasing coverage with regard to demographic developments will also be of great significance especially in countries which contain a large informal sector otherwise there will be no income security.”
She elaborated that there is also a need to look into the multi-tier system of the society which includes an increase of the coverage of the public pension system, enhancement of private pensions for higher income groups and a basic old-age pension for everyone. Ensuring old-age income security for women is also another challenge.

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