Summary — affordable pension options for employees in Sri Lanka

Key mandatory baseline

• Employees’ Provident Fund (EPF): mandatory defined‑contribution scheme — minimum total contribution 20% of gross pay (employer 12% + employee 8%). EPF is the core, low‑cost retirement vehicle for most private‑sector workers. (cbsl.gov.lk)
• Employees’ Trust Fund (ETF): additional mandatory employer contribution of 3% (no employee deduction). (etfb.lk)

Affordable employer-sponsored top-up options

1. Small employer top‑up into EPF / approved provident fund

   • Employers can make additional contributions to an employee’s EPF account (or to an employer-run Approved/Recognised Provident or Pension Fund). Using an approved fund keeps tax advantages and is often cheaper than individual private insurance. Seek approval from the tax authority for full tax benefits. (campaigns.ramco.com)

2. Group pension / group retirement plans (insurance or pension manager)

   • Buy a group defined‑contribution pension from a life insurer or pension administrator. Group contracts pool employees, lowering per‑person administration costs and offering economies of scale — good for affordability and easier administration than individual plans. Many Sri Lankan insurers offer “group pension”/retirement products and individual retirement plans (examples: AIA, Ceylinco Life; specialist pension managers also operate in the market). Compare fees, guaranteed features, and investment options. (cfal.com)

3. Voluntary individual pension plans (for employees who want extra cover)

   • Employees can take out personal retirement/pension plans from life insurers (these include unit‑linked or with loyalty/bonus features). These are flexible but often costlier per person — better as a supplement when employers offer a minimal employer contribution. (aialife.com.lk)

Practical and low‑cost design tips (what makes a plan “affordable”)

• Start from compliance: ensure EPF (12% employer) + ETF (3% employer) are paid on time to avoid surcharges. (cbsl.gov.lk)
• Use a group DC (defined‑contribution) design rather than guaranteed DB: DC plans shift investment risk to members and are cheaper to run. (cfal.com)
• Keep administration simple: outsourcing to a reputable pension administrator or insurer reduces in‑house costs. Get quotes and request a breakdown of setup vs ongoing administration fees. (cfal.com)
• Offer modest employer top‑ups (e.g., an extra 2–5% of salary) rather than large guaranteed pensions — this is more affordable and scalable. (Exact % should be modelled for your payroll.)
• Prefer broadly diversified, low‑fee investment options (unit funds or lifecycle funds) to improve net returns.
• Check tax treatment: approved provident/pension funds enjoy favourable tax treatment for members and funds; get approval from the Inland Revenue / Commissioner General where required. (campaigns.ramco.com)

Steps to implement (quick checklist)

1. Confirm EPF/ETF compliance and obtain latest employer reporting/remittance rules. (cbsl.gov.lk)
2. Decide the structure: (a) employer top‑up to EPF/approved fund, (b) buy group pension from an insurer/pension manager, or (c) set up an approved trust fund.
3. Request 3–5 competitive proposals from insurers/pension managers and ask for: total cost per employee, investment choices, vesting rules, withdrawal rules, insolvency protection and sample member statements. (cfal.com)
4. Check tax and regulatory approvals (Inland Revenue / Commissioner General and relevant regulators) before launch. (campaigns.ramco.com)
5. Communicate simply to employees (cost, benefit at retirement, portability, early withdrawal rules, taxation).

Where to get quotes / who to contact

• Central Bank / Department of Labour pages for EPF/ETF rules and compliance. (cbsl.gov.lk)
• Major insurers (examples with pension products in Sri Lanka): AIA Sri Lanka, Ceylinco Life, and other local insurers/pension administrators — request their group pension literature and fees. (aialife.com.lk)
• Pension administrators / consultants (example providers advertise group pensions and plan design services) — ask for references and sample fees. (cfal.com)

Final recommendation (short)

• For most employers the lowest‑cost route is: ensure EPF + ETF compliance, then offer a small employer top‑up through an approved provident/pension fund or a group DC pension from a pension manager/insurer. This gives meaningful retirement saving while keeping per‑employee costs low. Compare 3 proposals and check tax/regulatory approval before implementing. (cbsl.gov.lk)

If you want, I can:

• Draft a short Request for Proposal (RFP) template you can send to insurers/pension managers; or
• Sketch two sample plan designs (costed as % of payroll) for a small employer (e.g., 10–50 employees).