Huge credibility issues over state control of EPF

The credibility of the Sri Lankan government, fears that the money would be utilized for ‘other’ purposes and claims that some of the funds are being used to build roads, were some of the comments in this week’s BT-RCB poll on the management of the Employees Provident Fund (EPF).
The poll, which saw a majority saying they are dissatisfied with the management of the EPF and believe independent managers will give better returns, found many respondents concerned that the return on their savings was low.

Here is a cross section of some of the comments:

1) Better returns will depend on the competency of the Manager of the Fund and not entirely because of the appointment of a Board of Trustees to represent the workers.

2) The government should not have anything to do with the workers provident fund as the contributions belong to the employee and employer and these savings should be utilized by the workers in emergencies such as serious illnesses, children’s marriages, education of children, purchase of land and building, etc.

3) In some countries when a worker leaves the job irrespective of age, the savings in the provident fund would be given at the time of his leaving. In many instances the Sri Lankan government is found violating even the basic rights of the people. herefore, the workers must demand that the EPF must be based on universally accepted norms and not on the whims and fancies of the government.

4)Earnings per person seem to be going down rather than up in the EPF

5)In the management of the fund, the govt. should be responsible for collection and employer compliance, and entrust responsibility of managing the fund, including investments, to the top five banks in the country, with legal provisions that prevent the state from using/ investing the funds.

6)There should be professional and independent management of the workers' funds and/or by a team of portfolio managers who has specialized knowledge in pension fund management.
Independent management

7)In such a case we can hope for some accountability – at present there is no accountability at all
- This should be the mandate of a separate entity - like a committee from the top banks - that is held accountable for ensuring growth. When it comes to investment, the EPF should be treated as a corporate client and investments should be made on the basis of an equitable balance of risk and return, with no political interference. After all, the money belongs to the people who spent a lifetime earning it; not the state.

8)If the EFP & ETF is professionally managed, then it should perform better than what it is doing now.

No transparency Comments from the street poll No transparency in the government; robbery of the people’s money has increased State will take the EPF and invest it with no interest or profit to the persons who contribute We have doubts about our Ministers with no assurance that they won’t fiddle with the EPF for various projects What happened to the Tsunami funds? We don’t know. Similarly we will not know about the EPF money State management of people’s money is like handing over the protection of chickens to wolves Even if there is a problem in the management of the EPF, whom can we complain to? There is no justice today We have more faith in state banks. We have no faith in private banks. I invested Rs. 1 million in the National Savings Bank which I have while a friend invested Rs 100,000 at the same time in The Finance which collapsed and he hasn’t got the money back As things stand the government doesn’t have money. So there is a genuine worry about the EPF and whether the government will use it for their expenditure. On the other hand, there is no opposition (parties) either. These (parties) are the people who talk about going forward. I have no faith in them (all of them) If management is done through the Central Bank, then we need not worry. However we are not sure whether the Government controls the Central Bank The Government took the EPF money and Basil built the roads.