Income Security for Older Persons in Sri Lanka

Ganga Tilakaratna

Symposium on 'Old-Age Income Security and Universal Basic Income in South Asia' organized by the UNESCAP held in New Delhi, India, 27 February 2017

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%19

81

2001

2006

2011

2016

2021

2026

2031

2036

2041

2046

2051

2056

2061

2066

2071

Elderly (60 &above)

Working Age(15-59 Years)

Children (<15Years)

24.8% (2041)

12.5% (2011)

Source: Based on De Silva (2012): ‘The Age Structure Transition and the Demographic Dividend’

Ageing Population in Sri Lanka

0

20

40

60

80

100

120

140

1971

1981

2001

2011

2021

2031

2041

2051

2061

2071

Gen

der

Ratio

(num

ber o

f m

ales

per

100

fem

ales

)

75+

All 60+

Source: De Silva (2012)

Gender Ratio of the Elderly Population

A higher proportion of females in the 60+ age group. Proportion of females is even higher in 75+ age group

Income Security Schemes for Older Persons In

com

e S

ecur

ity S

chem

es

Retirement Benefit Schemes for Formal Sector

Public Servants’ Pensions

EPF

Pension Schemes for Informal Sector

Farmers' Pension

Fishermen’s pension

Self-employed pension

Cash Transfers for Low- Income Elderly

Elderly Assistance

PAMA, Samurdhi

Retirement Benefit Schemes for Formal Sector Workers

Public Servants Pension Scheme (PSPS) - since 1901

Non- contributory scheme for all permanent employees in the public sector

Widows, Widowers & Orphans Pension Scheme (W&OP)

Public Servants Provident Fund

Contributory scheme for public servants not eligible for the PSPS

Employee’s Provident

Fund (EPF)- since 1958 Contributory scheme for

formal Pvt. sector employees

Lump-sum benefits

Pension Schemes for Informal Sector Workers

Farmers Pension Scheme (in 1987)

- Contributions : every 6 months or as a lump sum

- Pension amount depends on the age of joining scheme

Fishermen’s Pension Scheme (in 1990) - Contributions : every 3 months or as a lump sum - Pension amount depends on the age of joining scheme

Pension for Self- employed Workers (in 1996) - Benefits and contributions are higher than other 2 schemes - Policy holder can choose the expected pension & design policy

Voluntary and Contributory schemes Benefits: Monthly pension at 60, survivor benefits and disablement

and death gratuity

Cash Transfers for Low-Income Elderly

Elderly Assistance Program Monthly cash grant of Rs 2000 to elders

aged 70+ years, without any other income

PAMA - Public Assistance Monthly Allowance Implemented by Provincial Councils Monthly cash grant of Rs 250+

Samurdhi Cash transfer Monthly cash grant to low income

families (Rs 750 +)

Coverage of Income Security Schemes for Elderly

UNESCAP (2015); Tilakaratna & Jayawardena (2014)

Adequacy of Benefits?

16,675 16,814

1499 1000 1000 2000 250 750

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Am

ount

in S

LRs

Poverty line : ~ SLRs 3781 (Dec 2013)

Source: Based on UNESCAP (2015)

Benefits under these schemes are not indexed to inflation

A Fragmented System….

National Secretariat for

Elders –( Elders Assistance)

EPF Dept. (EPF)

Dept. of Pensions –

(PSPS)

AAIB- (farmers and fishermen’s

pension) Social Security

Board - (Self employed

pension )

Provincial Councils- (PAMA )

Divineguma Dept. –

(Samurdhi)

Sustainability of Schemes

The cost of the non- contributory PSPS is high, although it covers less than 20% of elderly

Given the increasing number of pensioners and rising costs,

sustainability of the non-contributory scheme is a challenge. Sustainability of the contributory informal sector pension schemes is an

issue – low and irregular contributions, inactive membership, inadequate government funding, etc.

1.4% of GDP (in 2015)

45% of transfers to HHs

(in 2015)

Expenditure doubled during

2009-2015

Conclusions and Recommendations

The current social security system has failed to provide adequate income security for a large share of elderly.

The weaknesses of informal sector pensions have indicated the difficulty of sustaining contributory schemes for informal workers.

Need for reforms to expand coverage and provide adequate income for all elderly.

Introduce a (universal) social pension scheme.

Reforming the PSPS : introducing a contributory scheme for public servants.

Thank you