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Lot of discussions are going on for EPF investments.Amendments to EPF act is to presented to the parliament on 18 of January.That will enable EPF to invest in equity market.
All these days EPF fund which comes to about Rs 900 Bn was mainly invested in Government securities.Since the drop of bank's deposit interest rates from year 2009 , with the intervention of CBSL ,government securities also drop in line with Banks deposit rates.
But the problem is such a massive amount of monies were invested in Government securities and what is the economic basics of yielding a return on them.Simply these monies were invested in government projects ,which may hardly yield a return above 5%.But governments continued to pay higher interest for EPF members irrespective of the outcome of its investments.It is just like paying interest for old members with new member's money.As a country are we getting anything from these types of investments.
Since the private sector in Sri Lanka annually reports an average growth more than governments projects , Investing (Through EPF/PENSION ) in public quoted companies is justifiable.
And more positively government's encouragement in private sector is endorsed by this move.Then the strong combination with private sector may be approved by investors , unfortunately present situation is not so.
Recent investments by EPF were very controversial , not because of the method , but the way it was done.
I may agree if EPF invests a certain percentage of its money in equity market rather than putting whole thing in government's projects.
All these days EPF fund which comes to about Rs 900 Bn was mainly invested in Government securities.Since the drop of bank's deposit interest rates from year 2009 , with the intervention of CBSL ,government securities also drop in line with Banks deposit rates.
But the problem is such a massive amount of monies were invested in Government securities and what is the economic basics of yielding a return on them.Simply these monies were invested in government projects ,which may hardly yield a return above 5%.But governments continued to pay higher interest for EPF members irrespective of the outcome of its investments.It is just like paying interest for old members with new member's money.As a country are we getting anything from these types of investments.
Since the private sector in Sri Lanka annually reports an average growth more than governments projects , Investing (Through EPF/PENSION ) in public quoted companies is justifiable.
And more positively government's encouragement in private sector is endorsed by this move.Then the strong combination with private sector may be approved by investors , unfortunately present situation is not so.
Recent investments by EPF were very controversial , not because of the method , but the way it was done.
I may agree if EPF invests a certain percentage of its money in equity market rather than putting whole thing in government's projects.
