EPF dormant accounts hits new high
Many Sri Lankans are in the habit of changing jobs frequently and they may have several Employees Provident Fund (EPF) accounts and at least one or more could be inoperative.
This was due to the practice of opening a new account for them by employers, and employees may have forgotten to transfer, amalgamate or withdraw money from their previous accounts, which become dormant. According to official provisional estimates, over 1.8 million EPF accounts are inactive with an accumulated amount of around Rs.1 trillion lying in dormant accounts at present.
An account becomes inactive, if no contribution is made for less than three years consecutively.
The need to assist such members has arisen to trace and revive accounts, which once retrieved can be amalgamated to their present EPF accounts. This could be done by establishing a help desk at the Labour Department or the Central Bank, a senior Labour ministry official suggested.
According to the Auditor General’s Department published data, the contribution credited to 1.2 million dormant members’ accounts amounted to around Rs.633 billion while the interest credited for those account-holders for the year 2014 amounted to Rs. 63.54 billion. It has now jumped to Rs. 1 trillion credited to dormant members’ accounts, official provisional data showed.
The EPF has swelled to a considerably colossal fund with an asset base nearing Rs. 3 trillion with over 2.6 million accounts and covering employees in the private sector, state corporations and statutory boards. The EPF is the fund with the largest asset base in the country at present while the Central Bank is now streamlining procedures and systems to facilitate its services and processes.
The fund surpassed most mutual funds in terms of returns in 2018, but the interest paid to members fell to 9.54 per cent in 2018, the lowest since 2006, official data showed. Return on investments of the portfolio was 10.4 per cent in 2018, down from 11.8 per cent the previous year, and interest paid to member accounts was 9.54 per cent, the lowest since 2008, according to the Central Bank 2018 annual report.