Thursday Nov 14, 2024
Thursday Nov 14, 2024
Monday, 8 February 2021 00:22 - - {{hitsCtrl.values.hits}}
The Government is preparing to amend legislation and formulate an agreement with India to allow Employees Provident Fund (EPF) access to an estimated 10,000 Sri Lankan workers employed in India.
Currently, most Sri Lankan workers have their pension funds transferred to Indian retirement schemes and can only withdraw them when they are 58 years of age. However, Indian workers employed in Sri Lanka can have their retirement funds deposited to the EPF, which can be withdrawn at the point they return home, the Labour Ministry said in a statement.
“Labour Minister Nimal Siripala de Silva, considering the challenges faced by Sri Lankan workers in obtaining their retirement funds, has proposed amending the EPF Act to provide Sri Lankan workers employed by local businesses in India, membership in the EPF. Under this arrangement their retirement funds will be remitted to the EPF and they can be exempted from using Indian retirement funds,” a Ministry statement said.
Under this proposed system Sri Lankan employees are expected to find it easier to withdraw their retirement funds once they return home. The statement pointed out that currently many workers face a multitude of challenges because they had to return to India after they turned 58 to withdraw their pension funds. Unlike Sri Lanka, India also has multiple retirement funds, which makes the process more challenging.
In addition to amending the EPF Act Minister de Silva has also proposed signing an agreement with India to allow Indian workers employed in Sri Lanka to have their pensions remitted to a retirement fund of their choosing in India, allowing them to be exempt from the local EPF system. Other countries have similar arrangements with India where workers can send their funds home and invest in a retirement scheme of their choice and not in the country of their employment.
The Labour Ministry said steps have already been taken to formulate amendments to the EPF Act, which will require Cabinet and parliamentary approval.
India operates a fragmented and complex pension system with a wide variety of schemes. In the realm of public pensions, there is a limited social safety net for the elderly poor. The old-age provision for civil servants is the most developed part of the system; they are covered by several schemes. Workers in the organised portion of the private sector are covered by mandatory plans operated by the Employees’ Provident Fund Organisation, which runs two pension schemes. Employers can decide to opt out of these schemes and establish Exempted Funds. There are also voluntary pension schemes in the organised sector called superannuation funds. Voluntary private pensions are available for the self-employed and for workers in the organised and unorganised sectors.
