EPF to come under independent body next year

Sri Lanka’s largest superannuation fund, the Employees’ Provident Fund (EPF) will be brought under a new independent body separating it from the Central Bank’s management, Finance Ministry sources affirmed.

New management arrangements for the EPF that terminates direct CB management will be made following a broad consultative process, a senior official of the Treasury told the Business Times. A suggestion has been made that part of the money from the EPF should be invested abroad, he revealed. A Cabinet policy paper will be presented to the cabinet of ministers for approval of new management arrangements by June 2024, he added.

The Monetary Board of the Central Bank (CB) currently carries out governance and decision making roles in the management of the EPF that are entrusted to it pursuant to the Employees’

Provident Fund Act.

Consequently, some governance decisions and responsibilities – such as investment decisions or the review of the EPF financial statements are with the Board and the CB’s Advisory Audit Committee (AAC), respectively.

“This could create a conflict-of-interest risk or the appearance of a risk of conflict of interest when the EPF invests in equity of banks or other financial institutions under the supervision of the CB,” an IMF report said.

The decision by the Government to bring the EPF under a new independent body is a timely action, Central Bank Governor Dr. Nandalal Weerasinghe pointed out recently. He noted that, the EPF was vested with the CB which managed it since 1956 though it was not among their functions.

The Fund represents 20.4 million member accounts with 2.4 million active member accounts.