Sri Lanka’s Debt Restructuring Is Hurting Older Women
Although there is a gender pension gap in both rich and poor countries, the problem is particularly acute in the developing world. Sri Lanka’s recent domestic-debt restructuring, which targeted pension funds, has illustrated how the mounting sovereign-debt crisis in developing countries could push even more older women into poverty.
COLOMBO – The World Bank’s Women, Business, and the Law Index has documented a persistent gender pension gap in rich and poor countries alike. This is partly because of gender-based legal disparities, such as a lower mandatory retirement age for women and the lack of pension credit for periods of childcare. Because women have shorter working lives, earn less, and have higher life expectancy than men, they often receive lower benefits, which must last longer.
But the problem is most acute in low- and middle-income countries. Around two-thirds of the world’s population aged 60 and older live in the developing world, and that share is projected to rise to 80% by 2050. Many of these countries do not adequately index pensions to inflation; instead, they apply discretionary increases when fiscal space is available. And, as Sri Lanka’s recent restructuring has shown, the mounting sovereign-debt crisis threatens to erode retirement savings further, pushing even more older women into poverty.
After defaulting on its foreign loans in early 2022, the Sri Lankan government agreed to restructure both its external and domestic debt, as required by its bailout agreement with the International Monetary Fund. The adjustment has had dire consequences for the Employees’ Provident Fund (EPF), the country’s largest superannuation fund, which is managed by the Central Bank of Sri Lanka and covers nearly 60% of the private-sector and semi-government workforce.