Independent public trust to manage state pension funds

In a most recent development, retired employees who are engaged in some other employment with EPF benefits have been facing difficulties in withdrawing their EPF money as the Labour Department is allegedly delaying the clearance of their applications citing data base issues, several employees complained.

The Inter Company Employees Union alleged that the EPF is facing cash flow issues as a result of the recent bond scam and other unprofitable investments in private firms and acquiring ownership of commercial banks.

It has invested members’ money in companies like PC House, The Finance Company, SriLankan Airlines and Hyatt Regency in Colombo, the union said expressing fear on the safety of employees’ lifetime savings.

JVP leader Anura Kumra Dissanayake has noted that the bond issue alone has caused a loss of Rs. 14.9 billion.

According to the EPF Annual Report for 2012, the reserves have been depleted by Rs. 29 billion. Recent statistics have not been published so far and only the 2012 /2013 annual reports were presented to Parliament up to now.

According to Treasury statistics, there were 156 Approved Provident Funds and Contributory Pension Schemes (APPF) with 168,900 members in 2014.

The total assets and investments of these APPFs were Rs.151 billion and Rs. 117 billion, respectively, at the end of 2014.

The existing regulation and supervision of APPFs by the Commissioner General of Labour is weak, and therefore, the savings of members in such funds could be at risk, a Treasury official said adding that a new regulatory and supervisory system with prudential and governance standards is essential to ensure the safety of member funds.

Meanwhile the government has already taken measures to manage pension liabilities by implementing a new contributory pension scheme replacing the current defined benefit scheme for any new recruits to the public service, Labour and Trade union Relations State Minister Ravindra Samaraweera revealed.

This was clearly indicated in appointment letters of new recruits to the public sector stating that the employee should abide by the decisions taken by the state on pension scheme with effect from 2016, the Public Sector Pension Protection Centre has said noting that they are contemplating an agitation by public sector employees to protect their pension rights.

The number of public sector employees is in the region of 1.4 million with almost one public official for every 15 citizens in the country.

Even with such a massive public sector cadre there are shortages of staff in schools hospitals and several other state institutions and the Treasury has undertaken a public sector cadre review to tackle this situation, the official said.