ECONOMYNEXT – Sri Lanka’s politicians have been duping the public all these years with promises of pensions, especially at election time, which are unsustainable as they are not properly costed and funded, a forum was told last week.
Civil service pension schemes are not funded properly, said Nishan de Mel, Executive Director and Head of Research at Verité Research, a think-tank.
“The money today needed to pay retired people tomorrow, not only is it not funded but also not costed,” he told the National Pensioners Day Symposium organised by the Department of Pensions Thursday.
“That means there’s no recognition in government accounting or budgeting about how much it will cost tomorrow to pay pensions due tomorrow.
“The consequences are that it is very easy to make promises about increasing pensions schemes, especially when there’s an election, because you don’t have to put aside the money,” de Mel said.
“Politicians don’t have to put their money where their mouth is. That’s dangerous for governance. It means people who don’t have a chance to vote today, such as children, are being told to pay tomorrow without knowing the cost of that promise.”
As society ages, governments are under pressure to arbitrarily to increase pensions.
“We are setting ourselves up for a serious crisis.”
He said the government must ensure any pension fund is costed and reported in national budgets, recalling how some schemes like the farmers’ pension scheme collapsed as it was not properly funded.
Nisha Arunatilleke of the Institute of Policy studies said many informal pension schemes like those for farmers, fishermen and migrant workers are not sustainable.
“The farmers’ pension scheme ran out of money. They were not able to pay for a whole year and then was restarted.
“This is where the sustainability issue comes in – if you don’t plan it properly you might run out of money.”
Civil service pension schemes are not funded properly, said Nishan de Mel, Executive Director and Head of Research at Verité Research, a think-tank.
“The money today needed to pay retired people tomorrow, not only is it not funded but also not costed,” he told the National Pensioners Day Symposium organised by the Department of Pensions Thursday.
“That means there’s no recognition in government accounting or budgeting about how much it will cost tomorrow to pay pensions due tomorrow.
“The consequences are that it is very easy to make promises about increasing pensions schemes, especially when there’s an election, because you don’t have to put aside the money,” de Mel said.
“Politicians don’t have to put their money where their mouth is. That’s dangerous for governance. It means people who don’t have a chance to vote today, such as children, are being told to pay tomorrow without knowing the cost of that promise.”
As society ages, governments are under pressure to arbitrarily to increase pensions.
“We are setting ourselves up for a serious crisis.”
He said the government must ensure any pension fund is costed and reported in national budgets, recalling how some schemes like the farmers’ pension scheme collapsed as it was not properly funded.
Nisha Arunatilleke of the Institute of Policy studies said many informal pension schemes like those for farmers, fishermen and migrant workers are not sustainable.
“The farmers’ pension scheme ran out of money. They were not able to pay for a whole year and then was restarted.
“This is where the sustainability issue comes in – if you don’t plan it properly you might run out of money.”
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