Govt. considers Pension Option for EPF Members 📈

The Sri Lankan government is currently discussing amendments to the Employees’ Provident Fund (EPF) Act to offer contributors the choice of a regular pension instead of a traditional lump-sum payment upon retirement. • Proposed Reforms The National Labour Advisory Council is evaluating an optional pension scheme to strengthen long-term income security for private sector and semi-government workers, particularly as the national population ages. The existing lump-sum withdrawal framework will remain an option for those who prefer it. • Fund Performance (End-2024) • Total Assets: Net worth rose 12.6% YoY to Rs. 4,375.7 Bn. • Contributions: Total inflows increased 11.3% to Rs. 234.4 Bn. • Net Position: Achieved a positive net contribution of Rs. 46.3 Bn (reversing a Rs. 5.3 Bn outflow in 2023). • Investment Income: Rose 6.8% to Rs. 513.8 Bn, supported by an 11% interest rate on member balances. • Sector Context The EPF remains the dominant social security mechanism, accounting for 81.0% of Sri Lanka’s superannuation sector assets. While current laws allow for a 30% early withdrawal for housing or medical needs, officials warned that frequent interim payments could weaken overall retirement protection. • Strategic Importance As the largest investor in government securities, the EPF is central to national fiscal stability. The proposed flexibility aims to mitigate risks for retirees while preserving the fund's role as a vital safety net for the labour market.