Fund Management - Employees' Provident Fund, Central Bank of Sri Lanka

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As at end 2009, the Employees’ Provident Fund (i.e. total liability to the members) stood at Rs. 752.2 billion recording a considerable increase of 16.6 per cent from Rs. 645 billion as at end 2008. Increase in both the income of the Fund and the member contributions were the main drivers of the growth of the Fund.

Investment of Funds

As the custodian of EPF, the Monetary Board is responsible for the investment of the moneys of the Fund and to earn a reasonable real rate of return to the EPF members in the longer-term. Hence, the Monetary Board has established an Investment Committee to support and advise the Monetary Board and the Employees’ Provident Fund Department. The Investment Committee consists of the Deputy Governor in charge of EPF (Chairman), Assistant Governor in charge of EPF, Superintendent of EPF, Additional Superintendent of EPF and the Deputy Superintendent overlooking the Accounts and Fund Management Division of the EPF Department. The Investment Committee has designed an Investment Policy Statement and an Investment and Securities Guideline for the EPF with the approval of the Monetary Board. The Investment Committee meets on a regular basis to evaluate the investment proposals presented by the Fund Management Division of the EPF Department and make suitable investment decisions in line with the investment policy of the Fund. The Accounts and Fund Management Division of the EPF Department is responsible for implementing these decisions. In addition, the EPF Department obtains approval from the Monetary Board for the investments which are beyond the authority level of the Investment Committee and in the instances where the investment is made for the first time in a particular company.

As a long-term retirement benefit scheme, the investment policy of EPF is focusing on earning a real rate of return in the long-run, while ensuring the safety of the Fund. Therefore, major portion of EPF’s moneys are placed with Government Securities while the balance part is invested in fundamentally sound listed and un-listed equities and highly-credit worthy corporate debt instruments. In order to maintain an optimal liquidity position, a smaller percentage of EPF moneys are invested in highly liquid securities such as repurchase agreements.

Investment Portfolio of EPF

The total investment portfolio of EPF stood at Rs. 737.1 billion as at end 2009, recording a 17.5 per cent growth compared to the investment portfolio of Rs. 627.3 billion in 2008. The growth in the investment portfolio is mainly driven by the return on investments and the growth in member contributions.

In 2009, 97.1 per cent of the EPF assets (at amortized cost) were held in Government securities while balance 2.9 per cent was invested in other public and private sector securities. In the preceding year, investment in government securities and other public/private sector securities were 96.9 per cent and 3.1 per cent respectively. Approximately 83 per cent of the securities in the EPF portfolio will mature within the next 5 year period.

Asset Allocation