Confusion over retirement age

The National Labour Advisory Council (NLAC), a tripartite body, is meeting next week to discuss with stakeholders a host of matters including the recent budget proposal to alter the age of retirement, a proposal that has caused a lot of confusion and anxiety and raised questions as to whether the government wants to dip into the Employees Provident Fund ( EPF) for state spending.

Labour Ministry Secretary M.P.D.U.K. Mapa Pathirana said several matters would be taken up at the NLAC’s monthly meeting. “We will be discussing many issues including the budget proposal on the retirement age. We want the views of all stakeholders on this proposal,” he told the Business Times. The NLAC represents the workers ( through trade unions), the employers ( via the Employers Federation of Ceylon-EFC) and the government ( Ministry of Labour).

The budget proposal by Prime Minister and Finance Minister Mahinda Rajapaksa to increase the retirement age to 60 years from a current 55 years (in the private sector) caught the private sector by surprise as in its current form, the retirement age is a prerogative of the private sector and there is no statutory regulation to enforce a retirement age. “This cannot be done. The only way the government can change the retirement age is through something like a National

Retirement Age Act. This is a misguided piece of advice,” said T.M.R. Rasseedin, General Secretary, Ceylon Federation of Labour ( CFL), adding: “I think this change is being proposed so that the government can use EPF funds”.

The age of retirement has been based on the EPF Act of 1971 which stipulates in Section 23 that a member of the Fund shall be paid the total amount lying to the credit of such member’s individual account as soon as may be practicable when “such a member, being a male, attains the age of fifty- five years, or, being a female, attains the age of fifty years”. In some companies, the retirement age can vary while in the state sector its 60 years.

Prime Minister Rajapaksa, in the budget speech, said that life expectancy for females is 76.6 years and life expectancy for males is 72 years. “Therefore, based on the life expectancy, it is proposed to amend the EPF Act to expand the retirement age for both men and women up to 60 years. I wish to also bring to your notice that at the time of the adoption of the EPF Act, life expectancy for females was as low as 57.5 years and life expectancy for males was 58.8 years,” he said.

Veteran trade union leader Palitha Athukorala said they were also opposed to the change in the retirement age. “If this is implemented it may also create a situation where someone who retires at 55 years ( since the government can’t impose the retirement age) will only be able to withdraw his EPF after reaching 60 years, five years later and in the case of women, it would be 10 years later,” he added. There are over 1 million workers in the state sector; over 3 million in the private sector and nearly 3 million self-employed.

Also opposing the move, COYLE ( Chamber of Young Lankan Entrepreneurs) said that continuation of employees beyond 55 will only incur an additional burden, since organisations will be compelled to pay high salaries for the retiring age employees. “Another vital factor is that by changing the retiring age to 60, it will deprive companies of hiring younger employees with new perspectives and innovative thinking due to the lack of such vacancies. This will also drastically increase the unemployment rate due to the blockage of providing employment to the new generation by the retention of the retiring employees,” it said in a statement.