EPF to expand investments in equity market
INVESTMENT: In pursuit of higher returns the Government is
planning to expand the listed equity portfolio of the Employees
Provident Fund (EPF), a step which would also give the much needed boost
to the Colombo stock market.
EPF which is the largest retirement benefit scheme of the country
recorded a total investment portfolio of Rs. 405 billion last year but
over 80 percent of the total investments were in treasury bonds.
Although the listed equity portfolio increased by 96 percent in 2005 it
still remained at 0.7 percent of the total EPF investment portfolio.
STRENGTH:The Employees Provident Fund of Sri Lanka (EPF) with an
asset base of Rs 427 billion and the total contributing membership
of 2 million, which accounted for 26% of the national labour force
stands as the central pillar of the retirement savings system in
Labour Relations and Foreign Employment Minister Athauda Seneviratne
speaking at the launch of the EPF's new website on Monday said that the
Government is looking at the possibility of increasing the share of EPF
invested in the stock market.
"However, EPF is a fund which determines the future of millions of
working people in Sri Lanka. Therefore, we cannot merely focus of
obtaining high returns. We should also select investment instruments
with acceptable level of risk. Therefore, we need to study and have
discussions with all the stakeholders before further increasing the
investments in the stock market," Seneviratne said.
The Administrative aspect of the EPF is handled by the Labour
Department of Sri Lanka whilst the management of the funds is by the EPF
department of the Central Bank.
The Minister also said the Government has identified the real estate
sector as a potential area of investment which can give higher returns.
"At the moment we are studying how the funds of retirement benefit
schemes of other countries are managed effectively. We have also
requested the International Labour Organisation to submit us a detailed
report on how such funds are administered and managed in other
countries," Seneviratne said. Earlier a major share of EPF was invested
was in Government Rupee Loans - a long-term off-market instrument.
Last year that portfolio was recorded at 14%. Since 1997 the total
investments in Treasury bonds - a long-term marketable investment
instrument, has expanded remarkably. The average listed equity portfolio
increased to Rs. 2,335 million last year. A senior official told the
Daily News that this was in keeping with the EPF's diversification
Stock analysts are of the view that institutional funds such as EPF
should be more active in the Colombo Stock Exchange which would help
bring stability to the market even in times of political turbulence.
The total realised return from the EPF's listed equity portfolio
amounted to Rs. 908mn in 2005. The major portion of the returns realized
from the equity portfolio arose from capital gains, which amounted to Rs.
817 million in 2005. A senior official said that by monitoring the
market conditions, EPF capitalized on the market opportunities with
long-term investments in eight fundamentally sound stocks.
New EPF website launched
The Employees Provident Fund of the Central Bank and the Department
of Labour have jointly developed a website for the EPF (www.epf.lk) that
provides a wide range of information about the fund in all the three
languages. This website marks an important milestone in the Fund
fulfilling a long felt need by employers, members and the public.
This website provides facilities to download all the necessary forms
relating to EPF. The website also consists of FAQ section, general
information on how to become members, how to send contributions and
other information such as refunds and loans.