“The Ministry of Labour is now studying the feasibility of a monthly pension scheme for the workers who are subscribers to the Employees Provident Fund,” said Minister of Labour Mahinda Rajapaksa at the inauguration of a workshop on Employees Provident Fund reforms for meeting the challenges of the 21st century.
This scheme is to be a voluntary scheme. A certain portion of the existing three lump sum benefits would be transferred to the Pension Fund to constitute an initial capital for investment. The Portions to be converted into pensions are 20 per cent of the EPF balance, total ETF balance and total gratuity payments. The remaining 80 per cent of EPF balance will be paid as a lump sum, the Minister added.
This scheme is however still under consideration and as The Sunday Times learns there is no set time limit for a presentation of a draft or a deadline for implementation.
The Minister said he was “sorry to note that during the last 38 years the EPF has not planned any beneficial schemes for the workers. The only relief that the workers have received from the fund is the housing loan scheme. Even the housing loan given to a worker by the State Mortgage and Investment Bank is at a very high interest rate.”
“I am sorry to find that all monies collected from workers are used by the Government without paying much attention to the sole earners of this money, namely the workers. I receive daily a large number of complaints from the employees in regard to to delays and difficulties encountered by them. Their complaints are both in regard to the work at the Labour Department as well as at the Central Bank,” he added.
The principal purpose of the workshop was to discuss the possibility of computerizing the EPF for which purpose the Labour Department was provided with funds last year.
However, due to procedural delays the computerization programme could not be implemented. With the current discussions the Labour Department expects the work to be completed before the end of next year.
The EPF unlike the Employees Trust Fund has resources totalling nearly Rs 110 billion. The EPF Act does not have provisions to enable the EPF (unlike the ETF) to invest that money in the stock market. The Minister said that this has proved to be a barrier for the EPF in providing a better service for its members. He also added that it was a serious undermining of the Sri Lankan private sector.
Among the proposals at the workshop was that members should be made to participate more actively in the running of the EPF. It was also proposed that the fund collecting operations of the EPF and ETF be merged but the two funds be continued as separate funds. The merger of the fund collecting wings of the funds would substantially reduce the work load and the cost of collecting the funds from the employers.
The EPF which started operating in 1958 was computerized in 1970. This process only involved the transferring of the data in to the computer and this system today is not capable of hardling the increased number of records with the desired efficiency. Thus not only must the EPF be computerized but its records must also be revamped to be more friendly.
The annual statement which at present is being sent to the employer should be sent to the members so that they would be better informed about the EPF and would encourage them to take more interest in the fund. Employers are known to default on payments and get away with it and this trend should be stemmed with the introduction of new legislation and tightening of the existing record system, so that the defaulters who delay payment can be quickly traced.
The need to sub-contract with the private sector was also reiterated as most older employees of the State institutions take a lethargic approach towards humdrum operations such as data-entry.
Governor of the Central Bank A. S. Jayawardena said that the EPF thus far has managed to function as a state backed social-security system and whether we like it or not, we will in the future have to move into contributory retirement systems managed by the private sector.
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