Towards National Pension Framework
By Hema Senanayake –October 16, 2015
Hema Senanayake
National Pensioners’ Day – 2015 was celebrated on October 08th. My attention was particularly drawn to the event theme and the symposium held after the official ceremony. The theme of this event is very interesting and is important as well. The caption of this article “Towards National Pension Framework” was the theme of this year’s National Pensioners’ Day.
From the event theme it intimates that pension planning is not a job done already; instead there is something more to do. This is why the symposium held after the main inauguration, has become appropriate. It has become a brainstorming session which provided an opportunity for the participants to air new ideas as to how Sri Lanka should design a National Pension Framework. The Pension Department itself reported it as follows: “After the official inauguration, heated debates could be seen in the second session which made arena for the discourse on National Policy on Pensioners.”
I have a few ideas on this subject but I approach this subject from a macroeconomic perspective. Therefore, I intend to take part in the discourse of this subject through this article.
What is a pension? A pension is an arrangement that is designed to prevent old-age poverty of the work force. Any issue or problem of poverty is a problem of the distribution of distributable output. Is the problem of distribution falls into the category microeconomics? No it is not; rather it falls into the category of macroeconomics. Businesses, investments and investment models do fall into the category of microeconomics. This means that pension planning cannot be resolved through business or investment models. Let me give you a quick example.
Several financial institutions have started offering contributory pension schemes. Nishan de Mel, Executive Director and Head of Research at Verité Research told to the symposium that, “Most schemes offer only payments for a limited period of time,”… “It can be called a pension only if it offers payment till death,”… “The use of the term pension is not regulated in the island,” (EconomyNext, Oct. 12th). This intimates the failure of at least one investment-based pension model.
Usually economic theory gives us more clarity to put new policies and programs in place. Hence, let us investigate the issue of old-age poverty with a little bit of economic theory.Read More
