CB to revise EPF investment guidelines

• Revamp to improve governance, transparency and rebalance investment portfolio
• Intends to facilitate more prudent investment decisions
• Wants to seek alternative investment avenues given low interest environment
• Operational efficiency and optimal service to stakeholders also targeted

The Central Bank plans to revise the Investment Guidelines governing the Employees’ Provident Fund (EPF) to improve transparency and rebalance the investment portfolio to generate higher income for members. 

Releasing Road Map ,2021 Central Bank Governor Prof. W.D. Lakshman said that the changes would also be aimed at enhancing operational efficiency.   

“Going forward, we expect to revise the Investment Guidelines to be in line with the latest market developments. The intention is to facilitate a more prudent investment decision making process, while strengthening the existing internal control environment,” he said this week. 

“We expect to rebalance the investment portfolio to generate a high risk adjusted rate of return compared to market rates, while seeking alternative investment avenues to diversify the investment portfolio given the current low interest rate environment.”

Further, to enhance the operational efficiency and provide an optimal service to the stakeholders, the Central Bank plans to implement a business process reengineering in 2021, with the assistance of competent consultants, thereby implementing a member-centric integrated IT solution, and investment and accounting modules.

The Central Bank continues to manage the largest superannuation fund in Sri Lanka, the EPF, with a view to facilitating a diversified medium to long-term investment strategy. The intent has always been to provide the maximum possible return to members, while adhering to stringent investment guidelines, the report added. 

“We have engaged in primary and secondary market investments in Government securities and equity transactions while also investing in corporate debentures.”

The EPF is the largest pension fund in Sri Lanka and is responsible for providing retirement funds to millions of workers. In Budget 2021 the Government proposed changing the retirement age from 55 years to 60 but this has been challenged by unions that insist workers should retain access to their EPF funds under current provisions.