Here’s a practical, employer-focused guide to affordable pension / retirement options for employees in Sri Lanka — what’s mandatory, common low-cost choices, examples of local providers, and quick steps to implement a budget-friendly plan.

Key mandatory schemes (you must comply)

• Employees’ Provident Fund (EPF) — mandatory defined-contribution scheme. Current minimum contribution is 20% of gross pay (employer 12% + employee 8%). EPF is the primary retirement saving vehicle for private & semi‑government employees. (cbsl.gov.lk)
• Employees’ Trust Fund (ETF) — employer-only contribution of 3% of wages (paid in addition to EPF). (etfb.lk)

Low-cost employer pension options (that build on mandatory schemes)

1. Maintain EPF/ETF compliance only (lowest‑cost legal baseline)

   • For many small employers the most affordable approach is to ensure timely EPF (12%) + ETF (3%) payments and offer no additional employer-funded pension. This gives employees a solid, regulated savings base.

2. Employer top-up to EPF (simple, low admin cost)

   • Employers can contribute additional voluntary amounts to employees’ EPF accounts (or make extra employer contributions). It’s administratively simple and leverages the existing EPF system.

3. Gratuity (statutory terminal benefit)

   • For many companies the Payment of Gratuity Act (or employment contracts) governs severance-style gratuity which is a one-time lump sum on qualifying termination/retirement. This is less costly than a full ongoing pension but provides a retirement lump sum.

4. Group defined‑contribution (DC) pension / group insurance pension plans

   • Insurers offer group pension solutions where employer (and/or employee) contributions are invested to create a retirement pot. These are usually lower-cost than bespoke defined‑benefit plans, have predictable employer cost (fixed contribution rate), and professional fund management. Examples of insurers offering group/pension products in Sri Lanka: AIA Sri Lanka, Ceylinco Life, Softlogic Life, Allianz Lanka. (aialife.com.lk)

5. Voluntary employee-contribution plans (matched contributions)

   • Employer offers matching up to a cap (e.g., employer matches employee contributions up to X% salary). This shares cost and encourages saving while keeping employer expense predictable.

How to choose an affordable plan (practical checklist)

• Start with compliance: ensure EPF/ETF are paid on time. (Noncompliance risks fines.) (cbsl.gov.lk)
• Decide budget as % of payroll: common tiers are 0% (EPF/ETF only), 1–3% employer top-up, or 3–8% employer contribution to a group DC plan.
• Prefer defined‑contribution/group DC: predictable cost, low admin, easier to scale for SMEs. (allianz.lk)
• Compare offers on: fees (administration & fund management), vesting rules, portability (employee can keep account if leaving), death/TPD benefits, and minimum premiums. Use insurer brochures/quotes for exact pricing. (aialife.com.lk)
• Consider employee involvement: allowing employee voluntary top-ups with employer matching improves retention at low employer cost.

Illustrative local providers / products to get quotes from

• AIA Sri Lanka — individual & group retirement/pension products (AIA Easy Pensions / Smart Pensions). Good for packaged solutions and small contributions. (aialife.com.lk)
• Ceylinco Life — “Pension Saver” and corporate retirement solutions; established local insurer with pension products. (ceylincolife.com)
• Softlogic Life — Corporate Pension Plan (group pension product; small minimum premiums noted). Good for SMEs seeking low minimums. (softlogiclife.lk)
• Allianz Lanka — offers corporate pension products and customizable group plans. (allianz.lk)

Cost-control strategies (keep it affordable)

• Start small: launch with employer match up to a low cap (e.g., match up to 2–3% of salary).
• Use group DC with pooled investments — lower fees than individual plans. (allianz.lk)
• Use phased rollout: offer voluntary plan to senior staff first, then expand as cashflow allows.
• Negotiate admin fees and choose low-cost fund options (e.g., bond/treasury funds for stable returns).
• Consider tax implications and payroll processing impacts — keep admin simple to avoid hidden costs.

Basic implementation steps (quick)

1. Confirm EPF/ETF compliance and payroll processes. (cbsl.gov.lk)
2. Set a budget (e.g., additional employer contribution target as % of payroll).
3. Request quotes from 2–3 insurers/banks for group DC or corporate pension products (ask for sample fees, vesting, benefit illustrations). Use providers above as starting points. (aialife.com.lk)
4. Decide employee eligibility and vesting rules (e.g., after 1 year or pro rata).
5. Update employment contracts/policies, communicate to staff, and start payroll deductions/contributions.
6. Monitor annually and renegotiate if fees/performance are unsatisfactory.

Points to watch / legal & tax notes

• EPF/ETF rules and contribution rates are statutory — always comply first. Rates and interest credited can change; check EPF/ETF official sites for updates. (cbsl.gov.lk)
• Tax treatment and deduction eligibility for employer pension contributions may vary; consult a Sri Lanka tax advisor or the insurer for up‑to‑date guidance before finalizing plan design.

If you’d like, I can:

• Prepare a one-page sample policy for an affordable group DC plan (e.g., employer match up to 3% with 1‑year vesting).
• Draft an email template to request quotes from the insurers listed (AIA, Ceylinco, Softlogic, Allianz).
• Or gather current insurer product brochures and a simple cost comparison (I can request quotes/links) — tell me which option you prefer.

Would you like the sample policy or a quote-request email template next?